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France Eyes Rise In Diesel Tax

by Ulrika Lomas, Tax-News.com, Brussels

20 December 2012


France’s newly installed committee on ecological taxation is currently examining the idea of increasing the tax on diesel, as part of its plans to reform the taxation of fuel.

Within the framework of its competitiveness program, the government aims to generate EUR3bn (USD3.98bn) in additional tax revenues from ecological taxation by 2016.

President of the committee on ecological taxation Christian de Perthuis underlined the need to revise the existing taxation of fuel, particularly given the health risks associated with diesel, flagged up recently by the World Health Organization.

Diesel, which accounts for 80% of fuel consumption in France, currently benefits from a lower rate of taxation than petrol. Diesel is taxed at on average EUR0.65 per liter, compared to EUR0.86 for petrol.

Perthuis has not divulged details, however, as to specific tax rates or a specific time frame for implementation of the changes.

Tax breaks linked to fossil fuel and electricity represented a revenue shortfall for the state last year of almost EUR5bn, according to the French environment ministry. Of this total, tax breaks accorded for aviation fuel represented around EUR2.5bn.

In contrast, the domestic tax on the consumption of energy products in France (TICPE), paid by consumers at the pumps, represented EUR25.5bn in revenues last year, of which EUR14bn flowed directly to the state.

The permanent committee is due to unveil details of its proposals in spring 2013. The government intends to provide for the recommended changes within the framework of the government’s 2014 finance bill.

TAGS: environment | tax | energy | aviation | oil and gas | tax rates | France | tax breaks

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