Doubt and anger over carbon tax

THE ANNONCEMENT that taxe carbone will be set at €17 a tonne has been met with strong criticism on how much it will cost to enforce and whether it will work.

The price of a litre of petrol will rise by 4 centimes and a litre of diesel by 4.5 centimes under the new tax, due to begin in 2010, which Prime Minister François Fillon described as a “real ecological and fiscal revolution”.

It will not apply to electricity.

However former Parti Socialiste presidential candidate Ségolène Royal described it as “ineffective, unjust and vicious” adding that people did not have the choice whether to drive or heat their house if there was no proper alternative.

President of centre party the MoDem, François Bayrou, asked how Mr Sarkozy could justify that a family that used “gas to heat the house should pay 8-10% more than a family that uses electricity?”

Economist Olivier Go¬dard told Les Echos newspaper that the level had been set too low to be effective. The €32 level set by the Rocard commission, which had been tasked at looking at how the tax would be applied, was the goal that Mr Sarkozy should have been looking at, he said.

The tax was dismissed as a money-making scheme by Green MP Noël Mamère who added that electricity had been excluded from the tax to satisfy the strong nuclear lobby.

The Confederation of Small and Medium Businesses (CGPME) said it was “a new tax that weighs heavily on the competitiveness of businesses” and that the government should move quickly to introduce a carbon tax on imported goods to keep a level playing field.

Fixed at €17 for every tonne of carbon dioxide emitted, all fossil fuels will increase in price next year to try to encourage people to cut down on usage.

The government estimates that each household will pay an average €74 extra a year but this will be “repaid” by an equivalent tax reduction or “green cheque”.

Families in rural areas will receive a higher repayment than those in cities to cover the extra fuel usage in the countryside. A couple with two children in the country will receive €142 reimbursement as against €112 for the same family in a town.

The tax will be applied to domestic heating oil at 4.5 centimes and at .35 centimes for each kWh of gas, which means an extra €54 a year for a 1,000 litre oil tank. It is intended that it will increase every year.

Electricity prices are not affected as France creates 90% of its electricity through nuclear power and the government also wants to encourage the use of electric vehicles.

Although Mr Sarkozy said the government would receive no extra money from the tax, it has been pointed out that the increased fuel price will be subject to VAT and that will bring in extra revenue. It is estimated that the em>taxe carbone will bring in €3 billion in 2010.