Taxe carbone axed at eleventh hour

A NEW "carbon tax" on petrol and gas has been scrapped, just two days before it was due to come into effect.

The Conseil Constitutionnel, which examines the legality of new French laws, ruled last night that the taxe carbone on emissions was unacceptable.

The tax was unveiled by Nicolas Sarkozy earlier this year and was one of the key elements of the 2010 budget, alongside the scrapping of the taxe professionnelle.

It would have seen four or five centimes added to the price of a litre of fuel - the equivalent of €17 per tonne of CO² emissions - from January 1 with a similar rise in gas prices.

The Socialist Party had referred the law to the constitutional judges, who ruled that the tax would not achieve its goal of fighting climate change.

They said it included too many exemptions, which would mean that more than half of carbon emissions would not be taxed.

For example, the law focuses on petrol and heating and completely exonerates more than 1,000 of France's most polluting businesses - including oil refineries and cement works.

The judges also said the system of compensating certain rural households via an income tax credit was unfair.

According to Le Figaro, the taxe carbone would have brought in an estimated €4.1bn in its first-year tax revenue, split equally between households and businesses.

National statistics body Insee estimated that general consumer prices would go up by 0.3% in the new year to make up for the tax.
Socialist Party boss Martine Aubry said the judges' decision was "a major setback for Nicolas Sarkozy" and said the government needed to come back with a "fair and effective" alternative.

Poitou-Charentes president Ségolène Royal said the cancelled tax was "good news for the spending power of the French public".
However campaign group France Nature Environnement described the move by the Conseil Constitutionnel as "catastrophic".
Prime Minister François Fillon's office said the law would be redrafted and a new version presented to parliament on January 20.

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