Little impact seen from French tax ruling

Pressure still on for European ecological tax reform despite block to French energy tax, say experts

Last month's spectacular fall of French government plans to introduce an industrial energy tax should have little impact on wider European moves towards more environmental taxes, according to ecological tax reform experts.

France's constitutional court overruled the proposed tax just days before its scheduled entry into force, ruling that it dealt unfairly with different firms and was not focused on cutting greenhouse gas emissions as the government claimed (ENDS Daily 3 January). The government has been left with a big financial shortfall for funding a shorter working week. France's Green party has alleged that the development could impact negatively on ecological tax reform around the EU.

This is unlikely in practice, an environmental tax expert in the Organisation for Economic Cooperation and Development (OECD) told ENDS Daily. The case for taxing industrial energy consumption remains strong, and green tax reform in the OECD area is still growing, especially in Europe.

"One thing is certain from our [ongoing] assessment of green taxes," the official said; "industry pays very little for energy in any OECD country. The bulk of the energy tax burden is on households." Even where industrial energy consumption is taxed "what is striking is the number of exemptions".

British environmental economist Paul Ekins of NGO Forum for the Future agreed, but believed that opponents of industrial energy taxes would "look very carefully" at the French court ruling to see if it raised arguments that could be deployed elsewhere. Mr Ekins added that the French case had highlighted again the need for an EU-wide energy tax.

Follow Up:
OECD, tel: +33 1 45 24 82 00; Forum for the Future, tel: +44 20 73 24 36 10.

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