France Unveils Details Of Revised Carbon Tax Plans

by Ulrika Lomas, Tax-News.com, Brussels

25 January 2010

The French government has unveiled details of its revised carbon tax plans, due to enter into force on July 1, 2010.

Following the recent decision by the country’s Constitutional Court to censure its initial carbon tax plans, the government has confirmed its commitment to addressing the issues raised by the Court, while at the same time endeavoring to preserve the competitiveness of businesses in France.

The Court ruled that the government’s decision to exempt heavy industry from the carbon contribution, purely on the basis of the emissions quota system, which remains free until January 1, 2013, was not justified.

The government has confirmed that the revised text will retain key elements of the original plans. Consequently, the carbon tax tariff will remain EUR17 per tonne of carbon dioxide emitted. Regarding individuals, the provisions will also remain unchanged. For any businesses that are not subject to the European emissions quota system, the introduction of the carbon levy, offset by the reform of local business tax, will merely serve to transfer taxation from a tax levied on investment to a tax on pollution.

For certain high-energy consumption sectors, the government intends to maintain specific transitory provisions previously accorded. For example, the agricultural and fishing industry will still be taxed at 25% of the tariff, and the road transport industry, and maritime and river transport industries will be taxed at 65% of the tariff.

For heavy industry businesses that already participate in the emissions quota system, the carbon contribution will apply until January 1, 2013. In the interest of protecting the competitiveness of these companies, the specific rate and provisions will be determined following a dialogue between the government and selected representatives from industry, social partners, and non-government environmental organizations.

In parallel, the government also aims to defend the idea of a European carbon contribution and a carbon tax levied at European Union borders.

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