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Hollande Unveils French Carbon Tax Plans

by Ulrika Lomas,, Brussels

24 September 2013

During a recent conference on the environment, French President François Hollande confirmed plans to create a "climate energy contribution" (contribution climat-énergie – CCE) in 2014, while insisting that the "new tax" will be offset for both businesses and households in France via the lowering of other taxes.

Although President Hollande did not provide precise details as to the rate of the tax, he nevertheless made clear that the future levy will be progressive and will be based on the carbon content of existing energy taxes. Underscoring that the CCE is not "an additional tax," Hollande explained that the charge will be used to finance the energy transition and will therefore be redistributed to lower taxes for households and companies elsewhere.

The French President cited plans to lower to 5 percent the rate of value-added tax (VAT) to be applied for home insulation works carried out in 2014, compared to the 10 percent VAT rate initially planned. Furthermore, the Government plans to simplify both the tax credit for sustainable development and the zero rate "eco loan," focussing both provisions on major renovation works carried out in the home. Finally, businesses will benefit via the competitiveness and employment CICE tax credit, financed in part by the CCE, Hollande said.

Commenting, French Prime Minister Jean-Marc Ayrault stressed that the energy transition is one of the major challenges currently facing France. The Government's proposals are intended to facilitate this shift, to guarantee more efficient energy consumption in the future and to progressively move towards the use of renewable sources of energy.

The precise details of France's climate energy contribution are to be unveiled to the Council of Ministers on September 25.

TAGS: environment | tax | business | value added tax (VAT) | energy | tax credits | tax rates | France | tax breaks | European Union (EU) | Europe

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