Green car bonus to push French budget into red: report

by Staff Writers
Paris (AFP) June 19, 2008
An initiative which rewards buyers of environmentally friendly cars and penalises those who buy high pollution vehicles could cost the French government 200 million euros, the business daily Les Echos reported Thursday.

France introduced the bonus-malus (bonus-penalty) system this year, giving a tax break for the purchase of new vehicles which emit less than 130 grammes of carbon dioxide per/kilometre, and imposing an additional tax on vehicles that emit more than 160 grammes.

The scheme was supposed to be revenue neutral, with the penalties financing the bonuses, but the daily said the French finance ministry now estimates the scheme could end up costing the state 200 million euros (310 million dollars).

"The car bonus-malus is a victim of its own success," wrote Les Echos.

"The additional cost to the state complicates the extension of the scheme to other products," it warned.

Ecology Minister Jean-Luis Borloo told the newspaper earlier in the month he wanted to expand the scheme next year to a couple dozen other types of products in order to encourage consumers to favour environmentally-friendly goods.