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France To 'Temporarily' Lower Fuel Tax

by Ulrika Lomas,, Brussels

28 August 2012

French Prime Minister Jean-Marc Ayrault has recently unveiled government plans to lower the tax on fuel as part of efforts to curb the rising costs of petrol and diesel in France.

Interviewed on BFM television and RMC following a council of ministers meeting, Prime Minister Ayrault announced plans to introduce a “modest” and “temporary” reduction in fuel tax to ease the burden at the pumps.

Following a planned meeting with the country’s stakeholders, notably refining and distribution companies, scheduled to take place on August 28, the government intends as a second step to introduce a mechanism to regulate the price of fuel, Ayrault added, while underscoring the need for producers and distributors to assume “their own share of the effort”.

Ayrault had already provided his assurances earlier in the month that the government will ensure in the coming months that fuel prices do not exceed current levels. He said at the time that the government intends to take “appropriate measures” at the end of August to halt the price of fuel at the pumps, explaining that the idea of reintroducing a “floating” tax on fuel is one of the avenues currently being explored.

A floating domestic tax on petroleum products (taxe intérieure sur les produits pétroliers – TIPP) for petrol and diesel would lower taxes when oil prices rise and raise duties when prices fall.

After the first crucial ministerial meeting following the summer recess, French Finance Minister Pierre Moscovici alluded to plans to adopt the roadmap adopted by the council of ministers. French President François Hollande had alluded to five expectations of individuals in France, namely rebuilding Europe, redressing the public finances, returning to a growth path, restoring competitiveness and strengthening the Republican pact.

The government has confirmed plans to reform taxation within the framework of the 2013 finance bill and to present a new regulatory framework for its banks in the last quarter of the year.

Moscovici also evoked the problems associated with the cost of labour for the French economy, stating that he has not ruled out the idea of increasing the general social contribution (CSG) within the framework of the upcoming debate on the financing of welfare in France.

TAGS: Finance | tax

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