XM MLB Chat: Carbon tax defeated in France

Carbon Tax left too many loopholes for big business polluters

Reuters, 3/23: "Prime Minister Francois Fillon signalled an end to France's drive to introduce a domestic tax on carbon dioxide emissions, telling lawmakers on Tuesday French companies would suffer if the government tried to go it alone.

Speaking at a closed-door meeting with parliamentarians from his UMP party, Fillon was quoted as saying the tax should come into force across the European Union to avoid denting the competitiveness of French firms.

"I believe that the carbon tax won't fly," Marie-Anne Montchamp told reporters as she came out of the meeting.

President Nicolas Sarkozy hailed the new tax as a vital weapon in the fight against global warming when it was first approved by parliament last year.

But it was struck down by France's highest court just 48 hours before it was due to come into force, on the basis there were

too many loopholes for the big industrial polluters.

The new tax was expected to raise 1.5 billion euros ($2.15 billion) this year and the government had rushed to try to find its way around the court ruling, eager for new funds at a time when the deficit is set to shoot over 8 percent of GDP.

However, parliamentarians were concerned that any new tax was bound to penalise French industry unless their EU competitors were forced down the same road. There is no concerted effort in the EU to introduce such a tax.

The ruling centre-right suffered a comprehensive defeat in weekend regional elections and the government is under renewed pressure from its supporters to avoid unnecessary problems."