Germany, which currently holds the presidency of the European Union, is seeking agreement on a plan to harmonize energy taxes throughout the EU by the end of this year.

Its plan backs EU Commission proposals to introduce a minimum tax rate for most energy sources and to increase the levies on mineral oils. However the precise rate of tax will be left undecided until November. Germany will seek only to gain agreement on the principle of harmonization of tax rates.

The EU Commission proposed, in March 1997, that minimum tax rates on motor and heating fuels be increased in a bid to curb greenhouse gas emissions and end tax competition. It also proposed the extension of harmonized minimum rates on electricity, coal and gas.

The German proposals are designed to take into account the demands of various member countries. They suggest that the minimum tax rate for coal and lignite should be zero. Other fuels which do not currently fall under the EU tax regime would have low positive rates, but mineral oils used for heating and motor fuel should have higher minimum rates that those presently imposed, the plan suggests.

France wants nuclear power, which does not directly generate greenhouse gases, to be treated as a special case. For Britain, there is likely to be an exemption for fuel used by private households. Germany is also proposing exemptions for natural gas in countries where it contributes less than 12.5 per cent of the national energy market.