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France Eyes Carbon Tax In 2014

Thursday, 13 June 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

Presided over by economist Christian de Perthuis, the French committee on ecological taxation (CFE) has put forward ambitious proposals aimed at ensuring that the taxation of fuel is more environmentally friendly in France in future.

The committee has advocated that the taxation of diesel be progressively aligned with that of petrol from 2015. By gradually reducing the differential between the taxation of diesel and the taxation of petrol by EUR1 a year, the gap would narrow from 18 cents a liter currently to 10.6 cents a liter by 2020.

Back in April, the committee underlined the importance of removing the tax break accorded to diesel. At the time, the CFE insisted that the tax advantage is no longer justified given the impact of diesel both on health and on air quality.

In parallel, the CFE suggested that a carbon tax be introduced, within the framework of the domestic tax on consumption (TIC). France's TIC tax includes, for example, the domestic tax on the consumption of energy products (TICPE), the domestic tax imposed on natural gas (TICGN), and the domestic tax levied on the consumption of combustibles, including coal, lignite, and coke (TICC).

Despite plans to apply the carbon tax from 2014, the measure is to be tax neutral for the first year, offset by a corresponding reduction in the TIC. However, the tax is to increase progressively from EUR7 per tonne of carbon dioxide in 2014 to EUR20 per tonne in 2020.

It is not expected that the CFE's carbon tax proposal will meet with opposition from the country's Constitutional Court. Perthuis insisted that the provisions merely modify the base of an existing energy duty, rather than create a new tax. Furthermore, Perthuis made clear that the plans are in accordance with European law.

Established by the French Economy and Ecology Ministries, the committee on ecological taxation was tasked with drafting proposals to reform ecological taxation in France, to save the Government in the region of EUR3bn by 2016. The debate in France on the taxation of diesel has been fuelled by concerns over the impact of diesel on health. In June 2012, the World Health Organization warned that diesel is "carcinogenic." A link between diesel emissions and poor air quality in towns has also been highlighted. Furthermore, a recent report by the French Court of Auditors revealed that the difference in the taxation of diesel and petrol costs the state almost EUR7bn.



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