FRENCH PRESIDENT Nicolas Sarkozy has promised to levy a new carbon tax from July this year as his government races to salvage its flagship green policy after the original version of the tax was rejected by the country’s highest court last week.
Mr Sarkozy told a cabinet meeting yesterday that a revised levy on carbon emissions would take effect on July 1st. The original draft law was annulled two days before it was due to come into force on January 1st after the constitutional council threw it out.
The council, a nine-member body whose membership includes former presidents, said the government’s scheme had so many exemptions that it “runs counter to the goal of fighting climate change and breaches the principle of equality in taxation”.
It pointed out that these exemptions meant the tax would apply only to a fraction of greenhouse gas emissions. More than 1,000 of France’s top polluters would have been unaffected by the levy because they were already subject to EU carbon-trading rules.
The council’s unexpected decision was an embarrassing setback for Mr Sarkozy, who has cast himself as a champion of the ecological cause and sought to position France as a pioneer among big economies in the fight against climate change.
He resisted opposition from within his own centre-right political family and from the general population to impose the measure before the Copenhagen climate summit, and compared its introduction to some of the landmark political decisions in modern French history.
Set at €17 per tonne of carbon dioxide, the tax was also criticised by some green campaigners for being too low to change behaviour, as well as being too soft on industrial polluters.
But the government had defended the exemptions for highly polluting industrial sites such as power stations, oil refineries and cement works because they are already subject to an EU quota system to be progressively put in place from 2013.
Mr Sarkozy also promised to soften the effect of the levy with income tax concessions and “green cheques” for low-income households, while the initial legislation eased the burden on groups such as lorry drivers and fishermen, who have in the past blockaded ports and roads in protest at government measures.
Although the initiative has been framed as one aimed at changing behaviour, it was forecast to generate €4.1 billion in revenue and the decision by the constitutional council will put added pressure on the budget deficit.
After yesterday’s cabinet meeting, government spokesman Luc Chatel said a revised version of the carbon tax would take effect on July 1st.
Christine Lagarde, the finance minister, had hinted that large companies that pollute heavily would be penalised more in the reworked legislation, though the rates would vary.
“We are working on the possibility of applying reduced rates and of putting in place other incentive mechanisms or platforms,” Ms Lagarde told the financial newspaper Les Echos.
“The competitiveness of companies is important and there is no question of taxing all these sectors indiscriminately, including those that are economically fragile,” she said.