French PM Announces Reduced Carbon Tax Rate For Agriculture

by Ulrika Lomas, Tax-News.com, Brussels

30 September 2009

French Prime Minister François Fillon has announced that the new carbon tax will initially be levied at “around one cent per litre” for farmers and fishermen. The Prime Minister has also confirmed that both farmers and fishermen will be compensated in full for their payments of the carbon tax, in the form of a cheque to be issued by the treasury in February next year.

According to a recent statement from the Prime Minister, a number of regulations specific to the farming and fishing industries will shortly be put in place, in order to ensure that the inevitable rise in fuel costs associated with the new tax are not passed on to consumers.

The new carbon tax, or “contribution climat-énergie”, is due to enter into force in France from January 1, 2010, and a fixed levy of EUR17 per tonne of carbon dioxide emitted initially imposed. This levy represents an increase in fuel prices for individuals of 4.5 cents per litre per litre of petrol.

The aim of the new environmental contribution is to encourage both companies and individuals to reduce their consumption of fossil fuels, such as petrol, gas and coal. Targeting transport and heating in particular, the tax is designed to reduce emissions of the greenhouse gas, carbon dioxide.

Yet for weeks now, French farmers and fishermen have voiced their opposition to the introduction of the new environmental tax, outlining the huge risks to their profession that the new levy exposes. The main farmers union, the Fédération nationale des syndicats d'exploitants agricoles, has already called for the industry to be exempt from the tax.

Even France’s Agricultural Minister Bruno Le Maire has repeatedly called for the farming industry to remain largely exempt from the tax, insisting that tax relief must be provided, and immediately, otherwise it will lead to a major cash shortage for farmers and will hinder their competitiveness.

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