France’s Constitutional Council, the nation’s highest constitutional authority, last week annulled a tax on carbon emissions hailed by President Nicolas Sarkozy, saying that the tax that was due to become effective Jan. 1 would have allowed for too many exemptions.
The council said that the measure to introduce a €17 tax per every ton of carbon emitted would not have applied to 93% of industrial emissions. Among those exempt from the tax were power stations, oil refineries, and cement works—entities included in the European Union’s emissions trading scheme.
“The large number of exemptions from the carbon tax runs counter to the goal of fighting climate change and violates the equality enjoyed by all in terms of public charges,” the legal compliance watchdog ruled.
About 80% of France’s electricity is produced by the nation’s 58 nuclear power plants. According to France’s Le Monde newspaper, the tax would have generated about €4.3 billion a year.
Earlier this week, the French government decided it would revamp the carbon tax and present it to the cabinet later this month so that it could go into effect in July.
Finance Minister Christine Lagarde said on Tuesday that industries could be taxed for their carbon emissions—but at a separate rate to ensure that companies would not carry a heavy tax burden, reported Agence France-Presse (AFP). The minister also said that the new bill would be drafted following consultations with industries exempted from the first version.
Analysts said the tax was an important source of revenue for the country. France’s budget deficit is forecast to reach 8.2% of gross domestic product this year and 8.6% in 2010. AFP reported, however, that revenues of up to €4.1 billion expected in 2010 had been earmarked for redistribution in the form of tax breaks and “green cheques” for families that had cut their energy consumptions.
Sources: Conseil Constitutionnel, Le Monde, Agence France-Presse