The Malaysian Palm Oil Council (MPOC) has condemned efforts by the governing party of France, the Socialists, to impose a tax on palm oil produced in the developing world.

The MPOC said the tax is disproportionate and discriminatory, and a new analysis commissioned by the council found that there is no economic rationale for the new tax.

“The proposed tax is based on the flimsy grounds that palm oil is under-taxed in France. This is false,” MPOC CEO Tan Sri Dr Yusof Basiron said in a statement.

“The Assemblée Nationale has also proposed a ‘differential’ tax which would discriminate between different palm oil producers based on unspecified, unworkable and discriminatory views of sustainability.

“This action clearly undermines the national development goals of developing countries. The differential tax proposal is a clear violation of both World Trade Organisation and European Union rules,” he added.

The National Assembly approved the new tax on palm oil on Friday as part of a wider biodiversity bill. The tax starts at €30 in 2017 and rises by €20 a year to €90 in 2020, rather than at a flat rate of €90 as originally proposed.

The new levy, which adds to an existing tax of €104 a tonne, is well below the Senate’s initial proposal that started at €300 (RM1,370). The measure will now go to the Senate.

Professor Pierre Garello of Université Aix-Marseille said the premise for increasing taxes on palm oil is economically unsound.
“The claim that palm oil is ‘under-taxed’ in France is factually and materially wrong. Senators and MPs are using incorrect economic measurements to justify new taxes, which is misleading and makes for terrible laws,” he said.

Garello, who conducted the analysis, said palm oil is already overtaxed compared with other vegetable oils.

The MPOC stressed that any additional tax on palm oil in France has no economic rationale and neither proposal should be supported by the French government as there is no basis for any tax increase.

“Malaysia is a good friend of France, and French Foreign Minister Jean-Marc Ayrault had promised the people of Malaysia that he would not tax palm oil. Mr Ayrault had promised the 300,000 small farmers in Malaysia that France would not harm them with a new tax. We expect this promise to be kept,” said Yusof.