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French Court Rejects Carbon-Emissions Tax

France's constitutional court struck down a new tax on carbon emissions, dealing a blow to President Nicolas Sarkozy, who has made fighting climate change a key part of his tenure.
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Πεμ, 31 Δεκεμβρίου 2009 - 11:15
France 's constitutional court struck down a new tax on carbon emissions, dealing a blow to President Nicolas Sarkozy, who has made fighting climate change a key part of his tenure.

The Constitutional Council ruled the tax, which was intended to take effect Jan. 1, wouldn't have applied to 93% of industrial emissions. The court said the proposed tax of 17 euros, or about $24, on every ton of carbon emitted allowed for too many exemptions. All the exemptions, the court ruled late Tuesday, created "a breach of the principle of tax equality," according to a copy of the ruling on the council's Web site.

Mr. Sarkozy pledged tougher environmental legislation in his 2007 presidential campaign and emphasized climate change in his victory speech after being elected. He had championed the tax, which would have been the first such sweeping levy introduced in France in the past 20 years. It was forecast to generate 4.1 billion euros ($5.89 billion) for the government.

The rejection by France 's court highlights the challenge governments face in lowering carbon emissions amid resistance by some industries. The climate conference in Copenhagen this month ended with only a weak agreement, amid concerns by participant countries that binding targets for emissions reduction would hurt their international competitiveness.

France 's law instituting the 17 euros-per-ton tax exempted a range of high-emitting commercial users, including power stations, oil refineries and cement works. The government made the exceptions because it worried a carbon tax might hurt French industry.

The law also imposed a less-stringent carbon tax on groups such as truck drivers and fishermen, who have in the past blockaded ports and roads to protest government measures. Farmers and fishermen were scheduled to pay the tax at one-quarter of the full rate, while the state planned to reimburse 35% of the amount paid by truck drivers.

The carbon tax would have fallen mainly on consumers' use of gasoline and heating fuel, and would have entailed an increase in the price of car fuel of about four euro cents per liter in 2010.

The court ruling is a rare boost for the opposition Socialist Party, or PS, which filed the appeal that led to the council's ruling. "This tax was unjust," said Benoit Hamon, a PS spokesman. "The biggest polluters weren't called upon to contribute . . . Households with no other option than using their own cars and fossil fuels for heating would have borne the burden."

The government is scheduled to present a revised version of the bill to parliament by Jan. 20. Mr. Hamon said the PS would push for all forms of energy consumption to be taxed.

The court decision removes a source of government revenue at a time when economic downturn has already squeezed tax receipts. France 's budget deficit is forecast to reach 8.2% of gross domestic product this year and 8.6% in 2010.

To limit the effect of the carbon tax on domestic industry, Mr. Sarkozy had hoped to extend a version of France 's measure to the entire European Union. That would have given the EU the option of taxing imports from countries with looser emission controls so as not to hurt the bloc's industry.

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