EU pushed to look at green tax plan

By Huw Jones and Adrian Croft

BRUSSELS (Reuters) - Britain and France won backing from the European Union's leaders on Friday to study if sales tax on green products could be cut to help the environment even though the European Commission is unconvinced.

French President Nicolas Sarkozy said EU leaders agreed to ask the bloc's executive to study all fiscal tools that could be used to increase the use of environmentally friendly products, including lower rates of Value Added Tax (VAT).

France and Britain put forward the proposal at a two-day summit of EU leaders that ended on Friday, arguing that it could help the bloc's members meet their climate change goals as well as reduce energy consumption.

"I am convinced that reduced rates of VAT is one way to boost clean products. The Commission is mandated to study that," Sarkozy told reporters.

Consumers were mystified why a clean car should cost more than one that pollutes, Sarkozy said.

Prime Minister, Gordon Brown welcomed backing from EU leaders to study the Anglo-French proposal further.

"People have been persuaded by the arguments that we should look at this very carefully," Brown told reporters.

"The debate has started. We've got this review happening and I believe that's very substantial progress in only two days," Brown said.