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Chirac In Favour Of Carbon Tax On US Firms

by Ulrika Lomas, Tax-News.com, Brussels

05 February 2007


French President Jacques Chirac has warned the United States that the European Union could begin imposing a carbon levy on imports from the US unless Washington begins to make a serious commitment to cutting carbon emissions.

In an interview published by the New York Times, the International Herald Tribune and the French weekly Nouvel Observateur, Chirac said that there was growing support from within the EU for a tax on imports from countries which have refused to sign up to the Kyoto protocol - the United States being the most notable example.

“If it is European, and I believe it will be European, then it will all the same have a certain influence because it means that all the countries that do not accept the minimum obligations will be obliged to pay," Chirac was quoted as saying ahead of a meeting of scientists in Paris to discuss climate change.

He also claimed that there was a consensus across the 27-member EU for such a measure. “I believe we will have all of the European Union,” he said.

France is leading the call to punish countries with poor environmental track-records with harsher taxes. Last November, French Prime Minister Dominique de Villepin spoke of a similar proposal to impose a carbon levy on goods imported into the European Union, to be used to compensate businesses which are facing tougher environmental measures in the EU, during a speech delivered to a sustainable-development meeting in Nairobi.

“We have decided to reinforce the principle that the polluter pays. Europe has to use all its weight to stand up to this sort of environmental dumping,” he said.

“I would like us to study now with our European partners the principle of a carbon tax on the import of industrial products from countries that refuse to commit themselves to the Kyoto Protocol after 2012,” he added.

Countries which have signed the Kyoto pact have agreed to emission-cutting targets, but the process is fatally flawed, as some of the world's biggest polluters have refused to take part. China, one of the world's fastest-growing economies which produces more than 4.7 billion tonnes of CO2 each year and rising, is another notable objector.

Critics of the French plan have dismissed the proposals as nothing more than protectionism in disguise and would likely be illegal under world trade rules in any case.

According to Villepin, France will present concrete proposals to the EU about how such a tax might work in the first half of 2007.


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