Brown to lobby EU on greener VAT

Mr Brown believes the tax system can be used to give incentives.

Gordon Brown has said he will push for lower taxes on environmentally friendly products across the European Union.

Mr Brown said the UK and France would seek to persuade other nations of the need for an EU-wide cut on VAT levied on less polluting goods.

The British Prime Minister made the pledge during his first meeting with French President Nicolas Sarkozy.

The European Commission welcomed the initiative but said it would require agreement from all 27 member states.

'New incentives'

Speaking in Paris, Mr Brown said market mechanisms were needed to encourage consumers to buy greener products such as low-energy fridges and insulation materials.

The plans would involve reducing rates of VAT on energy-efficient products and energy-saving materials Gordon Brown

"It is now time that we give new incentives to people who are wanting to buy environmentally friendly products," Mr Brown said.

"The plans would involve reducing rates of VAT on energy-efficient products and energy-saving materials as an incentive for consumers to make more sustainable decisions."

Mr Sarkozy added that it was "unfair that a polluting car costs less than a car that does not pollute".

Any changes to EU-wide tax laws would require the approval of all 27 members, something that is likely to be far from straightforward.

The scope of goods which could enjoy tax benefits could become a major sticking point.

The BBC's Alex Ritson in Brussels said the plans may also meet with opposition from countries worried about the prospect of reduced tax revenues.