France backs down on truck 'ecotax' after protests

Paris (AFP) - France's Socialist government bowed to public pressure on Tuesday by suspending plans for an environmental tax on trucks, in its latest climbdown on a controversial tax hike.

Prime Minister Jean-Marc Ayrault said the new "ecotax" on commercial road transport, due to take effect on January 1, would be suspended after protests at the weekend in western France's Brittany turned violent.

It was the second time in less than a week that President Francois Hollande's deeply unpopular government backed away from a tax hike, after saying on Sunday it would not impose planned tax increases on savings plans.

Under pressure from the European Union to rein in the state deficit, the government has announced about 3 billion euros ($4.1 billion) in tax increases for next year, but is struggling with widespread opposition to the hikes.

After an urgent meeting with lawmakers and local officials from Brittany, Ayrault said the application of the ecotax had been put off across the country so the government can listen to opponents.

"Courage is not obstinance, it is listening, understanding," said Ayrault, whose government is at a record low in opinion polls ahead of municipal and European elections next year.

"This is why I have decided to suspend the implementation of this ecotax, to give the time needed for dialogue at the national and regional level," he said.

Ayrault insisted however that the decision was "a suspension, not a cancellation" of the tax.

The tax, aimed at encouraging environmentally friendly commercial transport, imposes new levies on French and foreign vehicles transporting commercial goods weighing over 3.5 tonnes.

It came under fire from farmers and food sector workers across the country, but especially in Brittany, where the economy is heavily dependent on agriculture.

Violent clashes that left several people injured broke out between protesters and police in Brittany on Saturday, and another major protest is planned for this Saturday in the Breton city of Quimper.

Protest organisers vowed to press ahead with demonstrations despite the suspension.

"This is not enough," Christian Troadec, the mayor of the town of Carhaix and a key protest organiser, told AFP.

"Brittany is demanding the permanent suspension of the ecotax, especially since we don't know how long this moratorium will last," he said.

Ayrault and other ministers called for calm.

"Everyone must take their responsibilities now," Agriculture Minister Stephane Le Foll said. "We need to be able to calm things down and return to the path of dialogue."

The ecotax was adopted by Nicolas Sarkozy's centre-right UMP government in 2009, but its implementation has repeatedly been put off.

Officials said the suspension of the tax, which would raise about one billion euros per year, would last at least several months.

Environmentalists slammed the government for postponing the tax, with Green MEP Jose Bove calling the move "pathetic" and an "incredible retreat".

France's Greens rule in coalition with the Socialists but there was no immediate reaction to the move from the party's two ministers.

Hollande's government has put forward a number of controversial tax ideas since the Socialists took power in mid-2012, including the tax on earnings from savings accounts that was cancelled on Sunday.

The plan would have harmonised tax rates on interest earned from several different kinds of accounts at 15.5 percent and, in some cases, been retroactive back to 1997.

Opposition has also been growing to a proposed 75 percent tax rate on high earners, which the government is planning again after a first attempt at the tax was ruled unconstitutional.

French football clubs announced last week they will go on strike at the end of November in protest against the tax -- in the first lockdown in the professional French game since 1972.

Echoing arguments used by other corporate opponents, the clubs said the tax will make it harder to attract top-flight talent to France.

Eight French football officials, including six club presidents, are to meet Hollande on Thursday to discuss the tax.