PARIS French President Francois Hollande's government on Wednesday rejected demands of protesters in Brittany for the scrapping of a planned levy on truck traffic, defying the most violent anti-tax unrest since it came to power.
The western Brittany region is home to much of France's livestock and meat production sector, which has faced a spate of plant closures due to competition from cheaper foreign rivals.
Hollande, battling to bring France's public deficit in line with EU targets, has given way on several planned tax rises, including a levy on corporate profits and new charges on special savings products. Soccer clubs plan to strike next month over a "super-rich" tax they will have to pay on their top earners.
Local protesters - wearing red bonnets in a nod to the region's 17th century peasant revolts - fear the "ecotax" due to be imposed on heavy goods traffic from January will further hit their business. They have destroyed more than two dozen sensor-based toll-gates erected over major routes.
The government agreed last month to suspend introduction of the tax but rejected a deadline of midday local time given by opponents to scrap it altogether or face more protest action.
"The government has understood how great the difficulties are," Defence Minister Jean-Yves Le Drian, one of several Bretons in the cabinet, told France Inter radio. "But ultimatums have no place in the French Republic - that's not how we work."
Protesters reacted by saying they planned more action. Trade unions demanded a freeze on all lay-off plans in the region.
"We will gather in the next few days to decide on new actions, but what's clear is that we will not let things be," Thierry Merret, a leader of the 'red bonnet' movement and president of the FDSEA agricultural union, told Reuters.
The "eco-tax" was initially agreed by former President Nicolas Sarkozy to try to nudge firms toward rail and river transport while raising 1 billion euros ($1.35 bln) a year. Hollande, pushed by his Green coalition allies, decided to pursue plans for the tax after winning an election in May 2012.
It is unclear whether the government will be able to revive the tax at all in the run-up to local and European Parliament elections early next year in which Hollande's ruling Socialists are expecting heavy losses. Yet the state must pay out 800 million euros to the private contractor charged with administering the scheme even if the tax is abandoned.
French farmers say they are penalised because rivals in Germany and elsewhere do not have to pay France's minimum wage of 9.4 euros per hour, reducing their labour costs. A minimum wage is a main issue in negotiations for a new "grand coalition" between conservatives and Socialists in Germany.
Farm Minister Stephane Le Foll, another Breton, appealed to Brussels this week for increased aid to farmers - to no avail.
Protesters, who include farmers, agri-business workers and regional activists, say the tax would destroy jobs in a region already hit by a spate of factory shutdowns. Laid-off workers at the Gad slaughterhouse fought last month with employees at another site spared from closure. Protests have also erupted at a Marine Harvest fish-processing plant due to close.
Some unions disagreed with the call for further protests, saying the eco-tax was not their main priority.
"The eco-tax is a little thing far behind our priority, which is jobs," said Nadine Jourmant, a representative for the FO union at the Doux poultry group.
Economic woes do not fully explain the protests in Brittany, a region where official statistics show jobless rates are lower than the national average of around 11 percent.
Stephane Rozes of the Cap political consultancy said the "red bonnet" protests were fuelled by a potent mix of regional pride and fury against Brussels.
"There is the very strong history of solidarity between social groups in Brittany, but also anger against European policies that put nations under strain," he said. "That's why we're seeing the rise of populist movements."
(Reporting by Pierre-Henri Allain; editing by Mark John and Alistair Lyon)