France studying carbon tax introduction & possible negative effects
France is currently thinking of enacting a carbon tax to increase climate change mitigation efforts. If enacted, it would be applied to the consumption of energy in general.
With French electricity being mostly low carbon, the majority of the tax revenues would come from the transportation and housing sectors.
It is worth noting that this new tax would be compensated by a decrease in charges associated to labor.
A ton of carbon dioxide would cost emitters €32 euros (around $45) in 2010 and would bring the government an estimated €8.73 billion ($12.328 billion) during the first year.
Out of these, €3.57 billion would be collected from French households and the remaining €5.16 billion from companies and administrations.
In order to divide greenhouse gases emissions by a factor of four by 2050, the tax would increase with time to reach €56 ($80) in 2020, €100 ($140) in 2030 and around €200 ($280) in 2050.
These increases are expected to push both consumers and companies to steer away from carbon intensive solutions and to promote energy efficiency. As such, the tax would dramatically push the use of renewable energies – good news for the local clean tech sector.
The French magazine Challenges published an article with examples of what various households would have to pay. A four-person household could pay anything from € 234 to €310 during the first year depending of the type of cars they drive – and how much they drive them – and the fuel used for heating their house.
The French financial daily Les Echos noted in an article on this topic that Sweden implemented a similar tax as early as 1991 and that it has been increased fourfold since. Neighboring countries also enacted similar charges and all of them reported good financial returns. It led to the creation of several clean tech companies and contributed to the development of the wind energy sector in Denmark.
Even if it seems to be quite a good solution to cut our greenhouse gases emissions, not everything is rosy.
The first problem addresses less affluent households which would be most concerned by the tax. This part of the population dedicates a relatively important part of their budget to heating and transportation.
The second problem comes with the market distortions the carbon tax might create, with tax-levying countries on one side and tax-free countries on the other side.
Last but not least, people living in rural areas consume much more gasoline than their urban counterparts to drive to work. A solution would have to be found here as well.
Like the majority of my fellow citizens, I am largely in favor of this tax. I am wondering if a similar tax could be collected in the United States or in other countries.
What do you think ? I look forward to reading your comments and opinions.
[Photo credit: Flickr]
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