French Environment Ministry announces new tax to enforce ‘polluter pays’ principle

French Environment Minister, Dominique Voynet, announced last month that she has formed a working group to examine the feasibility of an 'eco-tax' on fertilisers and pesticides. This will form part of the General Tax on Polluting Activities ((Taxe Generale sur les Activités Polluantes - TGAP), due to be applied to the water sector in 2000. The working group must report to Voynet, by the end of the year.

The eco-tax is part of the French government’s continuing efforts to bring the country’s farmers to book. In 1993, French farmers were offered subsidies and a five-year exemption from paying pollution tariffs. That compromise is due to end this year.

Speaking to a French environmental NGO, Voynet said that the application of the ‘polluter pays’ principle to agricultural pollution is a priority. She said progress had been made in terms of cleaning up larger rivers, but “48% of water courses still fall short of quality targets. The National Environment Institute has just sent me a report showing the generalised presence of pesticides in rivers and groundwater. For example, in 1995, Atrazine levels exceeded drinking water standards in the water distributed to five million French people…. The quality of small water courses, often in rural areas, is not improving, and in some places it is getting worse.”

The French Water Agencies’ charging system is also due for an overhaul, beginning with the introduction of the TGAP. According to Voynet, “one of [TGAP’s] fundamental objectives” is to encourage a “more complete application of the ‘polluter pays’ principle.” The amount of money charged by the Water Agencies has until now been determined by the amount needed to repair damage caused by pollution. “This system is now recognised as insufficient to improve the behaviour of polluters,” said Voynet. “The application of TGAP in the water sector must improve the application of the ‘polluter pays’ principle without challenging the authority of the water agencies or the river basin committees.”

The TGAP is intended to be an integrated tax on pollution, enforced by central government. In 1999, the tax will replace five existing pollution taxes (on the treatment of industrial waste, on atmospheric pollution, on noise pollution and on the storage of treated waste). As such, it will at first only apply directly to the Agency for Environment and Energy Management (ADEME) and the French Customs Department will progressively take over the management, collection and enforcement of the tax. The Ministry of the Environment expects the tax to raise FF1.9Bn in 1999.

However, from the beginning of the year 2000, TGAP will also apply to the Water Agencies. The Environment Ministry has been keen to allay Water Agency fears about “loss of power, efficiency and money.”

As it stands, money will be collected under TGAP and then redistributed to each Water Agency. The Environment Ministry has therefore assured the Water Agencies that a special Treasury account will be set up to collect TGAP revenue and that the Water Agencies will continue to be financed at the same level as at present.

Negotiations are also taking place to preserve the major part of the fees collected under TGAP for the Water Agencies, according to Patrick Fevrier, assistant director of the Ministry of Environment’s water directorate.

The Water Agencies have been criticised recently for lack of financial accountability and overly complex charging procedures. The TGAP is the first of a raft of water sector reforms announced by Voynet in May. Other reforms include the formation next year of a High Council of Public Water and Sewerage Services, intended to help local authorities manage water and sewerage systems, and the introduction in 2002 of a Programming Law, designed to oversee the Water Agency’s five yearly policy plan.

Also planned for the near future, are a tax on works that affect the water system and are likely to increase the risk of flooding and the formation of an environmental police body.

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