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Eco-Tax Hungry Groups Call for Tax Changes to Favor "Greener" Vehicles

The United Kingdom has Friends of the Earth (FOE), California has its Sierra Club, and Germany has its Green Party. All three environmentalist groups are backing stringent measures to clean up fuels and cut pollution. In the wake of the $1 billion settlement with U.S. engine manufacturers, in October, Germany's Chancellor Kenneth Clarke called for a cut in excise taxes on cleaner cars and stiffer penalties for "gross polluters" like buses, trucks, and dustcarts (trash trucks).

Chancellor Clarke reached his conclusions based on a government report. "Fuelling the Debate," written by two of Britain's top experts on the environmental effects of motoring, cites tougher emissions standards for gasoline and diesel powered cars at the European level.

Gasoline is already subject to a special excise tax in most European countries. Germany's tax component is high (77 percent), compared to other countries, though France is highest at 81 percent, and the U.S. is lowest at 33 percent. German transport groups are warning that even higher fuel taxes could lead to layoffs and could hurt the competitiveness of many truckers and shippers.

Not all the details have been worked out, but the new German Social Democratic Party and its coalition partner, the environmentalist "Greens" plan to increase the fuel-tax by 14 cents per liter, bringing the total to roughly $1.61 per gallon.

Bernd Gottschalk, president of the German auto association, said the proposed "eco-taxes" could have a "domino effect" on the trucking industry if various German and European initiatives continue.