Gas guzzlers to pay more road tax in France

The French government was yesterday ironing out the kinks in a radical green road tax that will sharply push up the cost of purchasing four-by-four vehicles, people-carriers and high-performance sports cars.

Drivers of outsize sports utility vehicles and other "gas guzzlers" will have to ay a tax of up to €3,200 (£2,620) on new models from next January, under a controversial air pollution prevention plan championed by the environment ministry. The showpiece of a new environment bill aimed at cutting air, water and soil pollution over the next five jars, the scheme will also encourage purchases of smaller, cleaner vehicles by handing consumers tax credits or cash of up to €700.

The plan follows a controversial decision last month by Paris town hall to try to ban bulky 4x4s from the city centre. Politicians elsewhere in Europe are also taking aim at 4x4 vehicles, with London mayor Ken Living-stone calling them "completely unnecessary" and their owners "complete idiots".
The environment minister's proposal has provoked concern in other government departments since its announcement last week, however. The finance ministry has yet to assure itself that the carrot element of the scheme will not become a burden on the public finances.

"We are discussing exactly how the measure will be applied with other government departments and will need the approval of four or five departments of the European Commission before the law will be ready to be voted on by parliament in the autumn," said an environment ministry spokesman.

Final details of the scheme, such as whether the tax (or credit) will be paid in showrooms or at vehicle licensing centres have yet to be settled. Any tax credit would be complicated by the fact that only about half of French households pay income tax, the spokesman said.

Under the scheme, the 2m new cars sold in France each year will be divided into five classes, according to their emission levels. The idea is that most mid-sized cars will fall into a "neutral" band and be liable for neither a tax penalty nor a cash bonus.

Industry observers believe the measure could discriminate in favour of the two big French car manufacturers. PSA Peugeot Citroen and Renault, which account for about 60 per cent of French new car sales, are heavily weighted towards the production of small and midsized cars.

In a stagnant market, Peugeot's registrations fell 7.1 per cent in the first half of 2004, while Renault's rose 2.8 per cent. By contrast, BMW and Toyota, some of whose sales would be hit by the proposed scheme, saw first half registrations rise by 15.7 per cent and 13.6 per cent respectively.

"We have not pushed the government for this measure, but if it is going to be introduced it must be done immediately so the market is not distorted by people delaying purchasing small until the small car credit is introduced or rushing to buy big cars to avoid the tax," said Marc Bocque, a Peugeot spokesman.

Figures from the Society of Motor Manufactures and Traders highlight the massive disparity between big off-roaders and small city runabouts. A Toyota Landcruiser Amazon, for example, emits 405g of CO per kilometer, compared to just 148g for a three door Peugeot 206.

The environment ministry believes the income from the levy on the sales of about 300,000 big-engined cars sold annually will fund the cash rebates or tax credit given to the 700,000 or so purchasers of smaller, more environmentally friendly models. The remaining 1m card would be unaffected.