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EU ministers to grapple with common energy tax plan

BRUSSELS, Feb 18 (Reuters) - European Union finance ministers will try on Tuesday to overcome objections by Italy and adopt common minimum tax levels for energy products in a bid to fight global warming and pollution.

The energy tax, which needs the backing of all 15 EU states, would raise existing minimum tax levels for oil products and introduce EU-wide minimums for coal, gas and electricity.

EU leaders backed the bill in principle at a summit in Barcelona, Spain last year. But spats over exemptions for truckers, households and energy-intensive industries held up full agreement on the proposal which was tabled in 1997.

The European Commission, the EU's executive which has been urging states to adopt the bill, said on Monday it doubted a breakthrough would emerge at the finance ministers meeting.

"The prospects don't look very good...for an agreement tomorrow," said Jonathan Todd, the Commission's spokesman on tax affairs, citing objections by a "large southern member state".

Diplomats said negotiations got stuck after Italy insisted it wanted to extend tax breaks for truck fuel it introduced in 2000 after protests against rising oil prices.

France has introduced similar tax breaks, but was ready to phase them out by the end of 2004, according to diplomats.

Environmentalists see the energy tax as essential to spur companies and individuals to use energy frugally and reduce pollution caused by fossil fuels as well as nuclear power.

They said an agreement was needed before the EU takes in 10 new members next year, which would make it more difficult to get unanimous support for the package.

Germany in the past repeatedly blocked the bill, as it did not want to grant France and Italy an extension of tax breaks for road hauliers, but an accord had been expected this month.