Sarkozy announces carbon tax on fuel

French President Nicolas Sarkozy has announced plans for a new carbon tax aimed at combating global warming. The tax on consumption of oil, gas and coal will apply to households and businesses as of 2010.

French President Nicolas Sarkozy on Thursday announced plans to impose a new fuel tax next year on oil, gas and coal as part of a drive to combat global warming.

Sarkozy set the new tax at 17 euros per tonne of carbon dioxide (CO²), higher than the figure floated last week by French Prime Minister François Fillon.

“We asked ourselves what the right rate should be,”he said in an address following a tour of a heat pump factory in Culoz, near France's border with Switzerland. “Anything less would lead us down the road to catastrophe.”

The plan makes France the biggest economy in Europe to impose such a tax, called the “carbon tax”in France, on households and businesses, boosting Sarkozy's green credentials ahead of a key UN conference on climate change in Copenhagen in December.

“A significant effort”

"It is time to create ‘green’ taxation,”Sarkozy said. “The carbon tax will be created. It will be imposed as of 2010 on oil, gas and coal."

The carbon tax will be the same for households and businesses and will be paid by all users of fossil fuels. Specifically, it means a rise of 4.5 euro cents per litre of fuel oil and diesel and 4 euro cents per litre of petrol.

“This is a significant effort,”said Sarkozy, adding that revenues from the new tax will be put back into taxpayers' pockets through other tax cuts and “green cheques".

“It will have no impact on the spending power of French households,”he added, as much for the benefit of his own party members as the general public.

Sarkozy also announced the creation of an independent commission to guarantee “complete transparency”when it comes to carbon tax rebates.

Attack on Ségolène Royal

In his announcement, Sarkozy also made a barely veiled attack on Ségolène Royal, who ran against him in the 2007 presidential elections as a candidate for the Socialist Party, for criticising the plan even before the announcement was made.

Royal said at the end of August that a carbon tax would be both “unjust”and “impracticable”.

“I don’t know how you can sign Nicolas Hulot’s pact in 2007 and now withdraw that promise and not support what you said you would do yourself,”Sarkozy said without naming Royal specifically.

“Our system of republican parliamentary democracy cannot continue to function with people who do not respect their promises when they signed this pact. I signed, and I’m following through with my promises.”

Reservations about the new tax

France has been engulfed for weeks in a fierce debate over the carbon tax, with both the government's right-wing supporters and opponents on the left balking at the scheme.

Many lawmakers in Sarkozy’s own UMP party have expressed their reservations about the new tax.

The majority leaders in both the National Assembly and the Senate warned they would not blindly support the president on the issue.

“It boils down to taking four to five billion euros from the taxpayers’ pockets. It’s just not possible!”Jean-François Copé told the AFP.

The leader of the Socialist Party, Martine Aubry, has claimed that Sarkozy’s stance moved closer to that of her own party when he agreed that revenue from the levy should be redistributed to the taxpayers.

Suggested level of 32 euros per tonne of CO²

Olivier Godard, economist at the French National Centre for Scientific Research (CNRS) and members of the committee on climate-energy contribution (CEC) chaired by former prime minister Michel Rocard, presented their report to Nicolas Sarkozy in July.

The tax level originally suggested was 32 euros per tonne of CO², rejected as too high by Sarkozy, “especially at a time of economic crisis.”

Polls show about two-thirds of voters are against the tax and critics in Sarkozy's camp fear the new levy will cost them support during the current economic downturn.

Sarkozy ensured the tax will not apply to electricity, which is produced mostly from France's large network of nuclear reactors.

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

Source: France24