France will introduce a new carbon tax in a bid to slash its greenhouse gas emissions, French President Nicolas Sarkozy said in a long awaited speech.
While the need for a tax on carbon emissions has been recognised by politicians across the spectrum, many of Mr. Sarkozy’s conservative colleagues were opposed to its imposition, afraid that public ire over additional taxation would damage their chances in regional elections to be held next March.
The socialists and ecologists criticised the move saying it did not go far enough and that the poorest would be the worst hit.
In his speech Mr. Sarkozy sought to convince his fellow citizens of the need for such a tax, which is opposed by 67 per cent of the population. France would be the largest economy to impose such a tax.
Mr. Sarkozy said that France faced climate change and a paucity of oil and needed to “profoundly adapt its taxation system and create real ecological taxation.”
The tax would be initially based on the market price for carbon dioxide emissions permits, which is now €17 per ton of carbon dioxide, said the President. At that level, the government expects to raise €3 billion, which will be returned to households and businesses through a reduction in other taxes or repaid via a so-called “Green Check”.
The result would be a shift of the tax burden from other revenue sources to energy derived from fossil fuels in an effort to discourage their use.
Gasoline, diesel fuel, coal and natural gas will be subject to the tax, but not electricity, since France generates most of its electricity via nuclear power, which does not emit greenhouse gases.
The tax would hike up diesel prices by 4 centimes per litre, and 4.5 centimes per litre of petrol.
The plan, dubbed a “carbon tax” by most observers despite the government’s effort to brand it as a “climate-energy contribution,” has stirred passionate debate in France, where surveys say most voters oppose the idea. Mr. Sarkozy has brushed off opposition saying the carbon tax was similar to other major reforms that were originally unpopular in France, such as decolonisation and the repeal of the death penalty. A similar tax already exists in some European nations including Sweden, Denmark, Finland and Slovenia.
France hopes to play a leading role at a U.N. meeting in Copenhagen, Denmark, this December aimed at striking a pact to succeed the Kyoto Protocol, which bound 37 industrial countries to reduce greenhouse gas emissions by 5.2 per cent of 1990 levels by 2012.