French Constitutional Court Rejects Carbon Tax

http://www.bloomberg.com/apps/news?pid=20601092&sid=aY9Dhj8qZZZE

By Gregory Viscusi

Dec. 30 (Bloomberg) -- France's constitutional court rejected a proposed tax on carbon emissions, saying a web of exemptions violated the principal of equality and rendered efforts to cut greenhouse gas emissions ineffective.

The government said it will make new proposals on Jan. 20.

The tax, which would have started on Jan. 1, was set at 17 euros ($24.38) per ton of carbon-dioxide emissions, President Nicolas Sarkozy said in September. To make the tax more palatable, he partially or fully exempted power plants, public transport, airlines, farming and fishing, as well as 1,018 older cement, steel and glass factories.

In all, 93 percent of all industrial carbon emissions in France would have avoided paying the full tax, the constitutional court said in a decision published on its Web site. The tax would have fallen disproportionately on fuel for heating and cars, it said.

"The court ruled that the system of exemptions, due to their extensive nature, were contrary to the objective of fighting global warming and contravene the principle of equality before the tax system," the court said.

The court rejected all the articles relating to the carbon tax in the government's 2010 budget.

In a statement, Prime Minister Francois Fillon said a carbon tax remains a "priority for the President of the Republic and the government." He said changes to satisfy the constitutional court will be presented at a cabinet meeting Jan. 20.

The tax had been criticized by the Socialist-led opposition and critics in Sarkozy's Union for a Popular Movement, who said the tax would hurt the poor and handicap employers.

To contact the reporters on this story: Gregory Viscusi in Paris atgviscusi@bloomberg.net.