Court Sinks French Energy Tax Plan

PARIS, France, January 3, 2001 (ENS) - The French government's program of ecological tax reform was dealt a serious blow on December 28 when the country's constitutional court rejected a planned industrial energy tax that was due to take effect on January 1.

Voynet

French Environment Minister Dominique Voynet (Photo courtesy Earth Negotiations Bulletin)
The ruling has caused a severe political headache for Environment Minister Dominique Voynet. It also threatens the wider ecological tax reform program by wiping out half a billion euros (US$464.6 million) of revenue meant to fund the government's flagship policy of a maximum 35 hour working week.

The constitutional council's ruling was part of its a review of the 2001 budget and related tax changes. It finds the planned extension of the general pollution tax - the TGAP - to include energy use by about 40,000 industrial consumers to be unconstitutional on two counts.

First, the proposal is judged to be "contrary to the principle of equality" of taxation, because some lower energy consuming companies would end up paying more than other companies consuming more energy.

The second reason is that since the tax's stated aim is cut greenhouse gas emissions, it should therefore not have applied to electricity, which in France comes primarily from nuclear power and is therefore virtually carbon-free.

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President of the French constitutional court, Yves Guéna (Photo courtesy Conseil constitutionnel)
The government should instead have designed the tax to encourage industry to switch from on-site fossil fuel use to greater electricity consumption, the council said.

The French business federation, MEDEF, welcomed the ruling, but the Green party, of which Voynet is a member, accused the constitutional council of exceeding its mandate by seeking to influence national energy policy.

The Greens said the council had taken an excessively "reductionist" view of the tax, which had been created not only to reduce greenhouse gas emissions but also to increase energy efficiency.

Spokespeople for Voynet have made no comment on the court ruling. Still, they stressed that expansion of the TGAP is one of the basic requirements for the Greens' participation in France's coalition government.

Today, the finance ministry is looking for ways to fill the 35 hour work week funding gap, which amounts to over one billion euros when the scrapping of the energy tax is combined with the constitutional council's simultaneous rejection of plans to use revenue from tobacco and alcohol taxes for the reduction in the work week.

It is not known whether the government will seek to reintroduce an energy tax proposal.

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{Published in cooperation with ENDS Environment Daily, Europe's choice for environmental news. Environmental Data Services Ltd, London. Email: envdaily@ends.co.uk}