Income tax cut to offset eco charge

HOUSEHOLDS could benefit from a cut in income tax to compensate for a new levy on carbon emissions from next year.

Prime Minister François Fillon said a tax reduction was “one of the preferred options” to make sure households were not worse off when the new scheme comes into place.

Opponents of the taxe carbone - which will add about five centimes to the price of a litre of petrol - say it will penalise rural families who rely the most on their cars.

The tax, which has been set at €14 per tonne of CO2, is likely to cost the average household about €130 a year.

Fillon said the proposed tax reduction would be bigger for those living in the countryside, and people who do not pay income tax will also get money back from the government.

Nicolas Sarkozy is expected to announce further details of how the cut would be applied tomorrow.

The carbon tax on fuel has been proposed by the government in a bid to reduce carbon dioxide emissions.

It is expected to bring in €3bn a year – half of which will come from households and the other half from businesses.