Survival of “Green Tax” May Prove an Uphill Battle

President Hollande could face opposition from all sides over his proposed "green tax." Photo: Studiotobago for flickr.

President Hollande could face opposition from all sides over the proposed “green tax.” Photo: Studiotobago for flickr.

France’s promised “green tax” will not place an additional burden on the French public, Environment Minister Philippe Martin announced on August 22.

Although virtually no specific details have been made public, Martin assured French citizens—many of them weary of their country’s already high taxes—that the new tax would not place an additional squeeze on consumers.

Based on Martin’s promises and statements from other government officials, it can be inferred that the new carbon tax—if approved—will replace other, less environmentally-focused ones.

“Let’s be clear about this: This is not a new tax. It’s just a greening of existing taxes on energy,” government spokeswoman Najat Vallaud-Belkacem said on Europe 1 radio.

The operational details of the tax will become clearer when it is formally introduced this September, as part of the 2014 budget bill.

The tax’s primary purpose is to help France curb carbon dioxide emissions, which contribute dramatically to climate change. But there is no doubt that the tax is also meant to appease French Greens, who are vital allies for President François Hollande’s Parti socialiste (PS).

Hollande’s relationship with the Greens was damaged early this July, when he sacked Environment Minister Delphine Batho. Hollande dismissed her after she publicly criticized his budgetary policy, in a move meant to warn other ministers away from public dissent.

But while the Greens may welcome a carbon levy, the Hollande administration will need to convince the general public that the new tax will not place a burden on households, many of which are still feeling the pinch of the recent recession. Although economists officially declared the recession over earlier this month, unemployment is still high, and consumer spending remains fragile.

France’s nascent economic recovery could bode well for Hollande’s environmental goals. But with Hollande’s polls still low and French consumers still wary, the tax’s success is far from guaranteed.

The opposition Union pour un mouvement populaire (UMP) has indicated that it might support a greener tax code, but party Vice President Laurent Wauquiez made it clear that the UMP would not support any tax increases.

“If it’s just a nice way of wrapping up a tax increase; it’s ‘no,’” Wauquiez said.

Given the UMP’s recent history, this is a notably bipartisan tone. This February, when Parliament legalized gay marriage, the UMP relentlessly stalled with amendments and filibusters, and almost unanimously voted against the final bill.

If the UMP attempts such tactics again, the party will be forced to explain why it tried to implement a carbon tax itself while in leading the government in 2009.

The 2009 attempt, headed by the administration of President Nicolas Sarkozy, is an episode that the UMP would likely rather forget. The abortive bill was fiercely attacked by the strange bedfellows of tax opponents and unsatisfied environmentalists.

The law purported to lay a 17 euro-per-tonne tax on carbon dioxide, but the final bill carried so many exemptions and loopholes that less than half of French emissions would have actually been taxed. The Constitutional Court ultimately struck it down.

It is not only the UMP that might create friction if the proposed bill amounts to a tax increase. A number of Parti socialiste members of parliament, wary of supporting new taxes with local elections coming up next March, have said they oppose a new tax.

PS MP François Rebsamen told France Info radio that, while he supports green taxes, they “shouldn’t be punitive.”

Former PS presidential candidate Ségolène Royal, speaking at the party’s summer school in La Rochelle, told audience members, “now is not the moment to introduce an extra tax.”

Even if the carbon levy truly is a mere greening of the tax code, Hollande has openly said that he hopes to raise an extra 6 billion euros of tax revenue in 2014. This goal is certain to make approving the 2014 budget a bitter, frustrating fight.

Many economists and scientists have called a carbon tax the most effective way to curb emissions. Ireland, Denmark, Sweden, and Australia already have similar taxes in place, although Australian Prime Minister Kevin Rudd plans to switch to a cap-and-trade program.

Trackbacks

  1. […] France’s promised “green tax” will not place an additional burden on the French public, Environment Minister Philippe Martin announced. Although virtually no specific details have been made public, Martin assured French citizens—many of them weary of their country’s already high taxes—that the new tax would not place an additional squeeze on consumers. Based on Martin’s promises and statements from other government officials, it can be inferred that the new carbon tax—if approved—will replace… […]

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