Sarkozy tries to salvage carbon tax

December 30, 2009 12:00 am

, PARIS, Dec 30 – French President Nicolas Sarkozy faced an embarrassing setback Wednesday after the high court struck down a planned carbon tax to fight global warming, just days before it was to kick in.

The constitutional court ruled that too many exemptions to the tax on carbon dioxide emissions created inequalities and unfairly placed the burden of cutting down wasteful energy use on a minority of consumers.

Sarkozy had fiercely defended the measure in the face of strong public opposition, calling it a "revolutionary" approach in the fight against climate change and making it a pillar of his 2010 budget.

The court ruling was seen as a severe blow for the French president, coming less than two weeks after world leaders failed to reach a binding deal on climate change at the Copenhagen summit.

The right-wing government was forced to quickly go back to the drawing board and Prime Minister Francois Fillon announced that a new bill on the carbon tax would be submitted to cabinet next month.

"France has shown that it is a leader in the fight against climate change and it will remain at the forefront by presenting new legislation on January 20," said government spokesman Luc Chatel.

In its ruling Tuesday, the Constitutional Council said the "large number of exemptions from the carbon tax runs counter to the goal of fighting climate change and violates the equality enjoyed by all in terms of public charges."

The Council said more than 1,000 of France\\\’s top polluters would have been able to dodge the tax and that the legislation did not apply to 93 percent of emissions from industrial sources.

The new levy on oil, gas and coal consumption set at 17 euros (25 dollars) per tonne of carbon dioxide emissions was aimed at encouraging French consumers to adopt good green behaviour and stop wasting energy.

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

France would have been the biggest economy to have applied a direct carbon tax when it was to come into effect on January 1, mirroring measures that exist in Sweden, Denmark and Finland.

Socialist opposition leader Martine Aubry called the court decision a "major setback" for Sarkozy and said the government must now "draw the necessary consequences from this fiasco" before presenting a new bill.

The Socialists, who had asked the court to rule on the legality of the carbon tax, had argued that the flat levy on fuel unjustly penalised low-income families, especially those in rural areas who have no choice but to use cars.

The Greens, who had argued from the outset that the measure did not go far enough, applauded the court decision, saying it had confirmed that the entire scheme was a "fraud".

Consumer groups had complained that the new tax would have hit rural households harder along with cash-strapped families who are unable to afford the energy-saving home renovations that could make a difference.

In practice, the tax would have raised household heating bills by up to 174 euros a year and pushed up the cost of petrol at the pump by about four euro cents per litre.

Polls showed two-thirds of French citizens opposed the carbon tax.

The government had anticipated revenues of 4.1 billion euros from the tax next year, but the funds were earmarked for redistribution in the form of tax breaks and "green cheques" to families that cut down consumption.

"France poorly prepared the carbon tax," acknowledged Jean Arthius, a centrist lawmaker and president of the Senate finance committee.

"Before the Copenhagen summit, we tried to be pioneers … but this is an issue that must be dealt on a supra-national level. We should have held talks with neighbouring countries," he said.


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