France announces carbon tax amid opposition

Culoz – French President Nicolas Sarkozy on Thursday unveiled a new carbon tax to help combat global warming, overriding strong public opposition to a plan which will further strain household budgets.

The new levy on oil, gas and coal consumption by households and businesses will come into effect in 2010, making France the biggest economy yet to impose a straight-up carbon tax.

In practice, the EUR 17 tax will push up the average household heating bill by up to EUR 174 a year and raise the cost of a litre of unleaded fuel by about EUR four cents, or about USD 0.25 per gallon.

"It is time to create green taxation," Sarkozy said in an address in Culoz, a town near the French border with Switzerland.

"This is a major fiscal shift, an important innovation," he said. "It is the first step of a fiscal revolution that will be developed."

Sarkozy set the new carbon tax at EUR 17 per tonne of carbon dioxide (CO2) and said it would be gradually increased to penalise only those who refuse to abandon their wasteful ways.

The president insisted the new tax was not a ploy to fill state coffers hit by a gaping deficit, and the additional revenues will be put back into taxpayers’ pockets through other tax cuts and "green cheques".

The levy will not apply to electricity which in France is produced mostly from nuclear reactors that are not a major source of greenhouse gas emissions.

Revenues from the tax are expected to reach EUR 4.3 billion per year.

France has been engulfed for weeks in a fierce debate over the carbon tax, with some of the government’s right-wing supporters fearing it will trigger a backlash at a time when families find themselves strapped for cash.

France has set a target of slashing its CO2 emissions by 75 percent by 2050 and support for environmentally-friendly measures generally runs strong among the French.

But a TNS Sofres survey released Thursday showed two-thirds of voters were against the tax and 73 percent believed it would not prompt consumers to reduce use of polluting energies.

France’s Socialist opposition has also warned against penalising low-income families with a flat levy on fuel, especially those in out-of-town areas who have no choice but to use cars.

Greenpeace France slammed Sarkozy’s plan, saying it will "change nothing in terms of behaviour" and will not help develop sources of renewable energy.

Greens leader Cecile Duflot welcomed some gains but said "there is a real problem with the fact that electricity is not part of the package" and does not encourage consumers to use it wisely.

The new tax plan could help Sarkozy boost his green credentials ahead of a key UN conference on climate change in Copenhagen in December that could mark a turning point in the fight against global warming.

Praising Europe’s commitment to cut CO2 emissions by 20 percent in 2020, the president urged other governments to follow suit and join the fight against global warming.

"Asia, the United States and major developing countries must make the same effort as Europe. There is no other choice. There is only one planet, a single world and we have a shared responsibility," he said.

Finland was the first European country to impose a carbon tax, in 1990, followed a year later by Sweden and later Denmark.

AFP / Expatica