Looks like there is going to be an interesting fight. From the Times:
France set itself on collision course with Brussels yesterday as it announced green taxes on gas-guzzling cars and a state-funded discount for vehicles that emit small quantities of carbon dioxide.
Under the scheme, which may fall foul of European Union competition law, a tax of up to €2,600 (£1,900) will be slapped on 4x4s and high-powered sports cars, from next month. Purchasers of small cars will receive a government payment of up to €1,000 under the plan to curb greenhouse gas emissions in France.
“We are the first Western country to give a bonus to virtuous products,” Jean-Louis Borloo, the Ecology Minister, said.
The move, dubbed the ecological no-claims bonus, was welcomed by environmentalists but is certain to anger German manufacturers, such as Mercedes and BMW, which will be hit by the new taxes. They suspect President Sarkozy’s Government of using ecology as a pretext for a programme to favour Renault, Peugeot and Citroën, the French carmakers, which tend to produce smaller vehicles.
The one-off tax will be €200 for cars emitting between 161g and 165g of CO2 per kilometre, such as the Opel Zafira; €750 for 166g to 200g, such as the BMW 3 Series; €1,600 for 201g to 250g, such as the Mercedes Class E; and €2,600 for more than 251g, such as the Volkswagen Touareg.
The bonus will be €200 for cars emitting between 121g and 130g, such as the Renault Mégane; €700 for 101g to 120g, such as the Renault Clio; and €1,000 for less than 101g, such as the Fiat 500.
There will be neither a tax nor a bonus for cars whose emissions are between 131g and 160g.
In a further move designed to take older vehicles off the roads, drivers will be able to claim a €300 payment from the State if they send a car at least 15 years old to the scrapyard and replace it with a small, environmentally friendly one.
A study by the French Automobile Observatory said that the move could generate 110,000 new car sales next year, boosting a market stagnating at an annual total of two million, compared with 2.4 million in Britain.
Paris said that the scheme would have no impact on public finances because the discounts would be funded by the new taxes. About 25 per cent of new vehicles fall into a category that will now be taxed – about 1 per cent at the highest rate – and about 30 per cent will be eligible for a payout, according to the Transport Ministry.
Christian Gerondeau, the chairman of the French Federation of Automobile Clubs, said: “If all the money taken off people whose cars have big engines goes to those whose cars have small engines, then we can admit that this is a step in the right direction.”
Michel Dubromel, of France Nature Environment, a federation of 3,000 green associations, said that the Government had reneged on initial pledges. “We recognise the importance of the initiative, but this is a step back from what was agreed.”
However, the French press said that the fiercest opposition could come from Brussels amid fears that the scheme could distort competition.