French 'Ecology' Tax Proposed For Highest-Polluting Vehicles

by Ulrika Lomas, Tax-News.com, Brussels

21 November 2008

Dividing opinion, a green ecology tax, due to be levied on the highest-polluting vehicles, has finally re-emerged at the top of the French government’s agenda - in the guise of a penalty premium.

Amendments to the 2008 Finance Bill, presented to the Council of Ministers this week, included this unwelcome proposal targeted at large car owners.

Extolled by the Minister for Ecology, Sustainable Development and Planning Jean-Louis Borloo - and now championed by French President Nicolas Sarkozy - the initiative stipulates that an annual surcharge of EUR160 will be levied on vehicles emitting in excess of 250 grams of carbon dioxide per kilometre.

Currently, the bonus/penalty system, designed to encourage individuals to purchase environmentally-friendly vehicles, is only applied to the actual purchase itself. Thus, individuals selecting an economical car, producing less than 130 grams of carbon dioxide, benefit from a bonus incentive, ranging from between EUR200 and EUR1,000. Conversely, those opting for larger vehicles, are liable to pay a penalty premium.

According to President Sarkozy, the annual tax will serve to finance the withdrawal of old high-emission vehicles.

Symbolic of the Grenelle project, with its commitment to sustainable development and protecting the environment, the measure, first announced by Borloo last June, nevertheless failed at that time to be included in the draft 2009 budget as predicted.

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