August 11, 2010 / 3:08 PM / in 7 years

Germany mulls tax on coal for power generation-paper

BERLIN, Aug 11 (Reuters) - Germany is mulling a new tax on coal used in power generation to help make up for revenue it would lose if it kept much-debated tax breaks for large corporate energy consumers, a newspaper said on Wednesday.

The new tax, which would be footed by energy companies, would raise 410 million euros ($534 million) next year and 710 million euros in 2012, the Handelsblatt newspaper said in a preview of its Thursday edition.

It would be limited to two years at first, according to a draft law seen by the paper.

The Finance Ministry declined comment.

In July, the German government said it hoped to save 1 billion euros next year and 1.5 billion in 2012 by reducing tax breaks for large corporate energy consumers, according to a draft law.

But it came under heavy fire from industry as well as from within its own parties.

A new coal tax would reduce the amount the government needs to save by cutting tax breaks for large corporates.

“My initial reaction would be very negative as it puts another levy on the energy industry and on customers and would make Germany less efficient and competitive,” Johannes Teyssen, chief executive of E.ON (EONGn.DE), the world’s largest utility firm, said during a conference call.

Earlier, E.ON said Germany’s proposed tax on nuclear plant operators would hit its profits, may weigh on its credit rating and would force it to cut investments. [ID:nLDE67A19J] (Reporting by Annika Breidthardt; Additional reporting by Vera Eckert and Andreas Rinke; Editing by Ruth Pitchford)

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