Death of French Carbon Tax: “Crime Against Humanity”

Remember how, only a couple short months ago, the election for Edward Kennedy’s old Senate seat was lost by the Democrats, and suddenly nothing in politics that people had thought to be sure was so sure anymore in the face of that supposed voters’ anti-Establishment revolt? This particularly applied to health care reform, which up to that point had been laboring slowly through Congress, but had already been passed by both chambers, in two different versions that still needed to be reconciled. With the Massachusetts Senate result, though, even many of that legislation’s greatest supporters were nonetheless ready to throw that effort overboard entirely or at least drastically scale back its ambition.

A similar thing has just happened in France, following regional elections there last Sunday which resulted in heavy losses for the governing UMP party of President Nicolas Sarkozy. Two days afterwards, French premier François Fillon announced that his government was dropping the idea of a carbon tax, something it had previously been developing with a view towards putting it in the tax code on 1 July. And there is reason to believe that this concept is certainly more permanently dead than US health care reform turned out to be; for one thing, as Claire Guélaud reports in Le Monde, the main French organizations representing employers and entrepreneurs broke out in rejoicing at Premier Fillon’s announcement.

Then again, for those who believe that the threat to humanity of climate change is real, a carbon tax is rated by economists as the #1 means of doing something about it. The reasoning comes straight out of standard public economics theory: emitting greenhouses gases is an “externality,” i.e. a spillover effect imposing a cost on others that the emitter doesn’t have to take into account, meaning that he engages in more of that activity than is socially optimal. Putting a price on the externality – here, charging him for his emitted carbon – means in the first instance that he engages in it less and, ultimately, that he probably finds other ways to accomplish the same result without so many emissions. (A second-best answer is “cap and trade,” whereby everyone is given licenses to emit a certain amount which are tradable, so that those who can become more efficient in their emissions can make money by selling their licenses to those who cannot.)

Still, it would have been a new tax, and no one likes that. I guess even in supposedly cerebral France political and business leaders cannot be expected to think ahead to the longer-term – to realize how the carbon tax could ultimately work to strengthen the competitiveness of French businesses by weaning them away from emission-rich production methods into more environmentally-friendly ones in which they could build world-beating expertise; or to realize how the imposition of a carbon tax by such a leading industrial nation as France could have a powerful example-effect for convincing other countries to do something similar. (Like the United States – wait now, let’s not let our thoughts just run complete wild here!)

No, I guess that, if anyone, it has to be retired politicians with no more need to please the voters to whom we can look for such thinking, such as ex-premier (under François Mitterand) Michel Rocard, who the Nouvel Observateur reports as calling the French government’s withdrawal of plans for a carbon tax “a crime against humanity,” and one which it will take only about ten years for everyone to see as such. “But there will be [such a tax] some day anyway,” Rocard goes on, “we’re not going to let the planet gradually become a frying-vat [une poêle à frire] in which life becomes impossible.”

Climate Change: >Yawn<

Just to give the whole picture, it’s also true that the French government was having trouble with its proposed carbon tax even before it withdrew it this past week, namely from the Conseil constitutionnel, basically France’s Supreme Court. Late last year that body advised the government that the tax would probably turn out to be unconstitutional since it violated the principle of equal liability to taxation – but that was mainly due to the many exemptions to big, polluting industries that the government was planning to hand out for the early stages of its imposition, a spoonful of fiscal sugar to help the bitter tax pill go down better. It’s also true, as that Le Monde article reports, that the new EU Budget Commissioner (he’s Lithuanian, and his name is Algirdas Šemeta) has already announced to the European Parliament his intention to present in June new fiscal measures relating to energy, which could potentially include a EU-wide carbon tax. (That would address one important reason why the French businessmen so hated the idea of a French carbon tax: “It would make us uncompetitive against our foreign commercial rivals!”)

But, really, how can anyone have any confidence that a carbon tax could come into being via the EU? The EU itself does not have taxing authority; it gets its money in the form of quota-contributions from member-states, so that the maximal function it could have here is one of coordinating the actions of all member-state governments as they willingly worked to enact such a carbon tax. And how likely is that?

In reality, the French government’s latest retreat on this front fits cleanly into a pattern of recent events, one whose other main highlight was the failure of the COP15 Copenhagen climate-change conference last December to produce any meaningful results. What that pattern says is: Climate change? No one really cares enough to do something about it. The alarm has been sounded, to be sure: anyone looking at the scientific conclusions cannot help but be shocked at what the Earth’s population will likely be facing in a few decades. But humanity’s existing institutions are simply not up to the task of reacting to this threat. You can keep this sad fact in mind tonight, especially if you plan to extinguish your lights for Earth Hour.

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