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The European Organisation for Packaging and the Environment (Europen) has urged the European Commission not to impose VAT on packaging because it could raise supermarket prices and distort competition.

Europen said it was concerned that initiatives to apply "multiple layers of charges" to packaging could divert attention from the "more fundamental measures" that needed to be taken to address climate change.

The idea of putting VAT on packaging as a way of combating climate change was suggested in a letter to commission president José Manuel Barroso from UK Prime Minister Gordon Brown and French president Nicolas Sarkozy.

Europen managing director Julian Carroll said the idea failed to take into account that the packaging industry was meeting EU recovery and recycling targets and had "decoupled waste generation from economic growth".

Packaging played a positive role in product protection and waste prevention because it saved energy and natural resources, and in some cases could lead to a reduction in greenhouse gas emissions, he added.

"Further measures would only add to existing ‘stealth taxes' on consumers and distortions of competition within the packaged goods sector. The priority should be to avoid under-packaging, rather than to penalise its use."

The carbon-based packaging tax introduced in the Netherlands on 1 January 2008 has pushed supermarket prices up by an average of 1%, according to Dutch retailers' lobby group CBL.

Europen did not take a position on whether prices would go up or not, but said VAT increases were generally passed on to the consumer.

When the possibility of imposing a packaging tax was discussed in Belgium in 2007, the Belgian food industry looked at its potential impact on prices and found that they would increase by 6-55%, depending on the product and what material it was packaged in.

The tax in the Netherlands, based on a calculation of carbon dioxide emissions per kilo of packaging material, has been set at 57 eurocents for aluminium primary packaging and 35 cents for plastics.

The Netherlands was the first European country to impose a carbon-based tax on packaging.