French Socialists fear tax backlash as carbon levy row erupts

France’s ruling Socialists are desperately back-pedalling after their newly appointed environment minister told their Green allies that the government would soon introduce a carbon tax. As the right-wing opposition bangs the “no-more taxes” drum, Finance Minister Pierre Moscovici has warned that voters may react against tax increases.

EELV Housing Minister Cécile Duflot with Environment Minister Philippe Martin at the Green Party's summer school Reuters/Benoit Tessier

Martin told a summer school organised by the Green Party (EELV) on Thursday that Prime Minister Jean-Marc Ayrault had given the go-ahead for a “climate-energy contribution”, in other words some form of carbon tax, such as those already existing in Ireland, Sweden and Denmark.

And, he said, he was in favour of raising taxes on diesel fuel, more polluting than petrol but at present less heaveily taxed because widely used in freight haulage and agriculture.

The opposition UMP, which accuses the Socialists of wanting to crush the French people under an unbearable tax burden, was predictably critical, but with a little more than restraint than it habitually employs.

“If it’s just a nice way of wrapping up a tax increase, it’s no,” said UMP vice-president Laurent Wauquiez.

The UMP has to tread a little carefully on the question, since it tried to introduce a carbon tax itself while in office.

In 2009 Prime Minister François Fillon’s government agreed a 17 euro tax on very tonne of carbon emissions but weighed the measure down with so many exemptions that the Constitutional Council ruled against it, judging that “less than half of greenhouse emissions would have been subject to carbon tax”.

There were some satisfied customers after Martin’s statement.

“The Greens are happy with the announcement,” said EELV MP François de Rugy. “The environment minister came to tell us that we are going to take action. We are going to decide together how the law is going to be implemented. I think it will reassure those who are worried about the creation of a new tax.

But, if the apparent promise delighted Green ministers, many of whose rank and file are asking just what the party is getting out of its participation in the government, it upset several members of Martin’s own party, the Socialists.

“I’m not in favour of the creation of a new tax because green taxes, which need to be introduced, shouldn’t be punitive,” Socialist MP François Rebsamen told France Info radio. “So I’m saying no to another tax.”

And, opening the Socialist summer school in La Rochelle this weekend, 2007 presidential election candidate Ségolène Royal declared, “This is not the moment to introduce an extra tax.”

Even worse for Martin, the third environment minister in the Socialists’ one year in office, Finance Minister Pierre Moscovici returned from his summer holidays with the revelation that the French may have “had enough” of the tax rises the Socialists have introduced under pressure from Brussels, the IMF and other right-thinking economic oracles to balance the budget.

While promising to oppose austerity in Europe –a project that has not proved 100 per cent successful – President François Hollande has undertaken to slash France’s 87-billion-euro budget deficit – also with disappointing results so far.

The chosen means have combined cuts and tax rises.

French taxpayers are receiving their tax demands as the Socialists meet and will see what the government’s 22 billion extra taxes – not evenly distributed and not all direct taxes – will mean to them this year.

All of which frightens Socialist leaders, who face a popularity test in local council elections next March, rendering many allergic to suggestions that the much sought-after middle-class voter may have to pay more to the state.

Martin himself has good reason to be nervous, too.

His predecessor, Dephine Batho, was fired after criticising this year’s budget and her predecessor, Nicole Bricq, was demoted after freezing oil and gas drilling.

No surprise, then, that he rushed to assure journalists on Friday that the proposed measure would not be an extra tax but a rejigging of existing ones so that fuels are taxed according to their carbon emissions.