French Variable Carbon Tax for Big Polluters? Oui

Variable Tax? ouiAfter much wrangling at the end of the year, French companies will be taking part in a new carbon scheme that will penalize them with a carbon tax. This is big news, as similar measures are being pushed throughout Europe, and Australia found themselves unable to get anything of the sort through- and the U.S., well, let’s just talk about the program and how it is working in France.

It will be a variable carbon tax- which in my opinion is a pretty savvy move. It’s savvy like the way Kenneth Feinberg got to look like he was slashing Wall Street executive salaries (and he was) but appease the people who are used to much higher paydays by allowing them to be paid large amounts of stock in the companies they work for. How is this similar? A variable carbon tax rate removes the debate around whether there should be or will be a tax and places it firmly on how that tax can be workable. It is a powerful social message that carbon emissions should be taxed, and while a variable rate probably means that people will be arguing over what is appropriate for eternity, it does mean that it will change with the political and social climate- which, in the world of eco-friendliness, is a good thing. There is no way that the world will start to feel like we should put more of an emphasis on fossil fuels that create carbon emissions, and as governments start to get a little tax money, you know taxes are always going to go up, not down.

So in the future, when France wants to finance that new solar panel field or those new wind turbines in the South of France, where do you get the money? Oh, let’s raise the carbon tax. Perfect.

This allows you to be flexible with the times, I think. It looks like over 1,000 companies in France will be dealing with the new tax, so it will become part of tens of thousands of lives. Difficult at first, to be sure, but eventually profoundly changing and useful. These companies had all been exempt up until a few days before 2010.

"We are working on the possibility of applying reduced rates and of putting in place other incentive mechanisms or platforms. The competitiveness of companies is important and there is no question of taxing all these sectors indiscriminately including those that are economically fragile,” said Christine Lagarde, French Economy Minister.

France has been wrestling with a carbon tax structure that their Constitutional council initially said held too many exemptions. Stop. Are you serious? Yes. The French constitutional council said too many companies were exempt from the tax. Yes. And that it violated the principle of equality among taxpayers…Can you imagine the U.S. senate rejecting a tax scheme because too many large companies were exempt from it? Just rejecting it outright? It’s a leadership move on two fronts: 1. That the tax should happen. 2. That everyone should be paying part of it, paying their fair share.

Cheers to France for making this one happen.

Photo Credit: TheAlieness GiselaGiardino²³ (via Flickr under CCL)