Energy tax '3.5p on petrol'

A PROPOSED European Commission energy tax would add 3.5p to the cost of a gallon of petrol, increase electricity prices by 1p a unit and raise that of gas by 0.3p a unit, according to the Department of Trade and Industry, writes Mary Fagan.

The DTI says that these increases would be phased in gradually until the year 2000. It has written to companies asking for their views on the controversial tax.

The Commission says the tax is needed to meet the target of stabilising carbon dioxide emissions, which contribute to global warming. But the Government has yet to decide whether it should approve the move.

The tax would be levied partly on all energy sources and partly on those that contribute to carbon dioxide emissions. It has been the centre of heated debate as some countries, including the UK and Germany, rely heavily on carbon- bearing fuels while others such as France use more nuclear power.

It will also bear more heavily on industries such as chemicals and steel. Any decision to introduce the tax will need the unanimous agreement of all 12 member states.