German court upholds ecology tax

Carbon dioxide emissions from cars dropped 1-1.5%, the authorities say

Germany's highest court has rejected a challenge against the government's tax on fossil fuels and electricity.

The challenge had been brought by a group of transport firms who argued that extra taxes imposed in 1999 threatened jobs in their industry.

In its ruling, the Constitutional Court said the "ecology tax" had helped protect jobs, with proceeds used to give pension breaks to companies.

The tax added 3.07 euro cents to the price of a litre of petrol per year.

Electricity charges have also been increasing.

Germany's Environment Minister Juergen Trittin welcomed Tuesday's court decision in favour of the law.

He told AP news agency that carbon dioxide emissions from cars had been decreasing in Germany since 2000, at a rate of 1-1.5% a year.

"The ecology tax has shown its guiding effect directly in this area," he added.

Mr Trittin also said 250,000 jobs had been saved thanks to pension breaks.

But transport industry officials argue the ecology tax is forcing jobs out of the country, losing the government billions of euros in taxes and welfare contributions.