President Sarkozy proposes carbon tax to fight climate change

France President Nicolas Sarkozy, on Friday, proposed a carbon tax intended to transform the use of energy in France.

The levy is to take effect from next year and is the first instance of large economy adopting a greenhouse gas tax on the lines similar to those in force in Finland, Sweden and Denmark over the past decade.

Under the proposals personal and business users of gas, oil and coal will pay €17 per tonne of carbon emitted into the atmosphere amounting to around 4 euro cents per litre of petrol and a 5 per cent increase in the price of household gas. Electricity is exempt as France generates over 80 per cent of its electricity from nuclear sources which releases negligible amounts of carbon.

The tax is designed to work as a disincentive to the use of fossil fuel.

However, analysts believe the president who is a recent convert to the green cause will have a tough time selling his proposal to the French public, his centre-right alliance members and the opposition. He has tried to package it as fiscally neutral claiming the revenue from the carbon tax would be used to cut income tax, or handed as 'green cheques' to the self-employed and others not subject to income tax.

He has also emphasised the need to take serious steps to tackle climate change and despite the general aversion to the idea of new taxes, has preferred to label it clearly as a 'carbon tax.'