the European Commission has approved the German government's ecological tax reforms, saying it does not break European Union ( eu ) rules on state aid. eu had questioned Germany's plans to hike taxes for certain energy-intensive industries, including agriculture and railways, but has now decided that the measures are in line with the eu 's environmental goals.

"The Commission has decided not to raise any objections since it sees them as being in line with the eu guidelines on state aid for environmental protection, past practice in other member states and the environmental policy of the community,' it said in a statement.

eu has approved the scheme for three years. If the German government does not complete the second phase of the tax reforms by then, they will have to reapply for eu 's approval on the same reforms again, the Commission said. Germany increased taxes on petrol, electricity, heating fuel and other energy products on April 1, 1999. The reforms hope to improve the environment, and at the same time reduce employers' contribution to pension funds by about 2.4 per cent.