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Carbon taxes raised to tackle climate change

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18:54 CEST+02:00
Sweden's government will increase taxes on CO2 emissions as part of its budget, in what it says is a bid to help tackle climate change. Petrol prices will go up 17 öre per litre, energy minister Maud Olofsson announced on Monday.

The increase in fuel tax is calculated on the basis of a 6 öre tax increase per kilo of CO2 emitted.

The prices will be counterbalanced by an increase in tax deductions for work-related trips.

"It is time for Sweden to go from words to action. We need to push for sustainable climate and energy policies," the government said in a joint statement.

Tax on diesel is set to increase by 20 öre per litre, but the government insisted that the tax deduction increase from 1.80 kronor per kilometre to 1.85 kronor per kilometre would make up for the rise.

Car tax on diesel cars will be reduced by 284 kronor per car per year. Duty on ethanol will be abolished from 1st January 2009. The government said it hoped the combined tax reforms would encourage owners of ethanol-enabled cars to use E85 ethanol fuel instead of petrol.

Taxes on the hydro-electric and nuclear industries will also be increased. The government argues that emission trading has increased the price of electricity, meaning higher profits on production of non-CO2 emitting energy.

"They're making very big profits, and it is reasonable that part of those profits are returned to the state," said Jan Björklund, education minister and leader of the Liberal Party, one of the four governing parties.

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