European Union finance ministers agreed Tuesday to lower sales tax on some goods and services, finally winning France the right to cut value added tax on restaurant meals.
But the loser may be low taxes to boost the sale of environmentally friendly products as several nations sought an end to tax opt-outs that have tangled EU governments in conflict for almost a decade.
The EU's top taxation official said he would probably have to back off a plan to levy lower VAT for green products because countries that struck the tax deal Tuesday "considered that it was the end of the road."
France and Britain had supported a green tax but France backed off in return for winning a 10-year battle to reduce restaurant rates.
French President Nicolas Sarkozy made an election pledge to reduce VAT on restaurants _ a move France believes will stoke growth across the economy by encouraging people to eat out more and restaurants to expand.
But he had to face down Germany which believes that such tax exemptions can damage trade in other countries as shoppers hop across borders for the best deal.
German Finance Minister Peer Steinbrueck on Tuesday ruled out a VAT cut in his country, saying "it isn't affordable."
He said Germany and other countries had yielded in return for other nations agreeing to drop their fight for low taxation on favored sectors.
EU nations can now apply reduced rates of as low as 5 percent on restaurants, audio-books and labor-intensive services such as hairdressing, home renovations, window-cleaning, domestic help and repairs for shoes, bicycles and clothes _ but only if they want to.
All of the EU's 27 nations must agree any changes to VAT which they can each charge at any rate between 15 percent and 25 percent.
France had been seeking to change the rules because restaurateurs there have long complained because their customers have to pay 19.6 percent value added tax on food and drinks, when the rate on fast-food and takeout food is 5.5 percent.
Until now, only 11 EU nations had the right to charge less tax on restaurant meals _ but France was not among them.