Will France tax the super-rich to finance its fight against climate change? - Euronews
Will France tax the super-rich to finance its fight against climate change? | Euronews
Rosie Frost
Suggestions on how to fund the climate transition from a recent report have been criticised by the French government.
France could need nearly €70 billion a year to address the climate crisis and reduce greenhouse gas emissions.
This estimate is part of a recent report handed to Prime Minister Elisabeth Borne on Tuesday (23 May). It comes not long after Borne presented a plan to combat global warming that would see France double the rate at which it is reducing greenhouse gases to meet 2030 climate targets.
The report recommends a one-off ‘green wealth tax’ on the country's richest 10 per cent and an increase in the country’s debt by 10 per cent of GDP - around €280 billion - by 2030.
But members of the French government aren’t happy about the suggestions, saying that a levy on the country’s wealthiest households is not the answer.
How much does France need and where could the money come from?
The report says that France will need additional public and private investment of €66 billion a year to fund its transition to net zero.
It suggests that the wealthy pay an exceptional tax on the basis that they tend to have much larger carbon footprints than the average person.
“To finance the transition...an increase in compulsory levies will probably be necessary,” the report’s authors write.
They go on to say that this could take the form of an “exceptional levy...which could be based on the financial assets of the wealthiest households”.
A 5 per cent tax on the top 10 per cent of France’s richest households could raise an estimated €5 billion a year by 2050, French economist Jean Pisani-Ferry, one of the authors of the report, told Le Monde.
He explained that it wasn’t just a question of finding the resources to fund the country’s climate plans but of “convincing the French that the burden is fairly distributed”.
The economist also said that the country shouldn’t hesitate to resort to debt in order to fund the transition.
“There are many bad reasons to go into debt, and the climate is not one of them.”
How has the French government responded to the recommendations?
Prime Minister Borne commissioned the report last year with the goal of understanding how the climate transition could impact France’s economy. While delivering her action plan to combat global warming, the question of funding was carefully avoided.
And responses to the recommendations in the report have been less than favourable.
Finance Minister Bruno Le Maire told French media outlet RTL that neither a levy on wealth nor an increase in debt were “good options”.
He added that the government’s policy was to reduce taxes in “a country which has the highest tax burden of all the developed countries.” Le Maire insisted that France would not increase taxes and didn’t think the proposal was the right way to fund decarbonisation.
Government spokesperson Olivier Véran echoed these sentiments in an interview with France Inter, stating that he preferred “something transformative” rather than “something punitive”.
“If a tax was enough to transform our country and green the planet, that would be fantastic. But I don’t think that’s really the issue,” he added.
“It’s more to get us all involved in changing behaviours, consumption patterns and production methods.”
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”