Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog

Carbon tax: Sarcozy backs off, Sen. Kerry pushes forward.
Howard Richman, 3/24/2010

Sometimes political parties change course when they find themselves advocating policies that would both hurt their country and their own future electoral chances. Sometimes they don't.

French President Nicolas Sarkozy of France is scrapping plans for a carbon tax that would hurt French competitiveness. He was responding to the defeat of his party in recent French elections.

Meanwhile, Senator Kerry is advocating that the United States go forward with a carbon tax despite its negative effects upon American competitiveness and despite the huge defeat of his party in a recent Massachusetts election.

The Financial Times reports Sarkozy's decision:

The French government on Wednesday said it would abandon its plan to introduce a carbon tax on domestic energy and road fuels unless there was agreement for a European Union-wide levy.

The U-turn on the controversial environmental tax come two days after the governing UMP party of President Nicolas Sarkozy suffered a heavy defeat in regional elections. Senior UMP politicians have blamed the defeat in part on the proposed tax, which was due to come into effect on July.

François Fillon, prime minister, told a meeting of centre-right parliamentarians that France would not penalise its industry by introducing the tax unilaterally.

Newsmax.com  reports Senator Kerry's call:

With the battle over healthcare reform won, President Barack Obama’s allies in Congress are turning their attention to climate change legislation — and drawing opposition from both sides of the issue.

Sen. John Kerry, a proponent of congressional action on climate change, said administration officials can now “pour their energy and attention” into the issue.

“In the wake of healthcare’s passage, we have a strong case to make that this can be the next breakthrough legislative fight,” the Massachusetts Democrat declared.

A carbon tax raises the cost of energy in a country, thus making its industries less competitive. The French bill was loaded with specific exemptions. The Financial Times article reports:

The carbon tax plan has had a troubled history.

It should have come into effect on January 1 but at the last minute was ruled unconstitutional by the Conseil d’Etat, an official body that reviews the legality of laws, and was postponed by six months.

The Conseil d’Etat ruled that the carbon tax was unconstitutional because the original tax exempted 1,000 of the biggest industrial emitters, covering 93 per cent of industrial emissions. The government exempted them because they were already covered by the EU emissions trading scheme. The Conseil d’Etat challenged this view, arguing that businesses were given free permits under the EU scheme until 2013.

Senator Kerry's bill, it if comes out of the Senate, will be similarly laden with exemptions. The American people, however, would not be exempt from its negative effects.

Comment by n.l. tilson, 4/2/2010:

for the first time in my adult life, i am afraid for my country.

Comment by M. Tremaine, 4/8/2010:

I'm a Canadian citizen, and I've been opposed to a lot of Stephen Harper's legislation thus-far. However, I am very happy that he decided not to persue a carbon tax, writing off his opposition's proposed tax that would "screw everybody". I think the last thing a country comming out of a recession needs is supressed industry.