Lower taxes or fuel check? The government said on Tuesday (October 19) that it would announce “by the end of the week” a device “fair and efficient” to help consumers faced with soaring prices at the pump. According to information from franceinfo, the Prime Minister, Jean Castex, should even make announcements “this evening [mercredi] ou tomorrow“, after having lunched face-to-face with the Head of State on Wednesday. “It’s not about inventing a gas plant, it has to be simple”, Government spokesman Gabriel Attal said after the Council of Ministers on Wednesday. However, the executive seems to have trouble deciding between a reduction in fuel taxes and a means-tested check. Explanations.
The fuel check: better targeted, but complex to implement
This is the solution favored by the Minister of the Economy and Finance, Bruno Le Maire, on the model of the energy check. which was distributed to nearly 6 million poorest households. If this response has the advantage of only affecting those who need it most, it is nevertheless complex to apply. Because it is not only necessary to define a ceiling of resources, but also to identify the people who are obliged to take their car to work.
Aid of this type already exists in Hauts-de-France, a region chaired by Xavier Bertrand. Nearly 50,000 people using their vehicle for professional reasons thus benefited in 2020 from a “transport aid” of 20 euros monthly. These beneficiaries must live at least “20 km from their place of work “,” earn at most twice the minimum wage “ and “do not live in an area already served “ by public transport, explains to AFP Antoine Sillani, regional advisor (LR) in charge of youth and community life. They must also complete an online application and send several supporting documents.
But the executive has difficulty in targeting such a device since it does not have“a database of people who need their car to go to work”, explained the Minister of Ecological Transition, Barbara Pompili. And the government does not want a “gas factory” device because it wants motorists to be able to quickly benefit from aid against the high cost of fuel.
Finally, last concern, a few months before the presidential election in April 2022: to avoid “that some, for threshold issues, feel excluded”, like “the upper middle classes”. “We do not want, after the ‘yellow vests’, to have a demonstration of white collar workers”, justifies to franceinfo a government source. Especially since this electorate abstains less than the popular classes.
Lower taxes: very expensive and not very ecological
The other option revolves around lowering taxes on fuel prices. As shown in the graph below, drawn up using data from the French Petroleum Industries Union, these taxes amount to nearly 60% of the bill paid by the motorist. The most important is the internal consumption tax on energy products (TICPE), which represents the fourth tax revenue of the State behind VAT, income tax and corporate tax (i.e. 33.2 billion euros). euros in revenue in 2019, according to the Ministry of Ecological Transition). But the motorist also pays 20% VAT which applies to both fuel and TICPE.
While lower fuel taxes are considered popular in public opinion, it has the fault of being “very expensive”, according to the Ministry of Finance. A drop of one cent per liter represents half a billion euros in lost revenue for the State, while it is hardly noticeable at the pump for the customer. “Passing the VAT from 20% to 5.5% on gas, electricity and fuels, as some candidates propose, would cost 13 billion euros in a full year, including 10 billion euros only on gasoline”, according to Bercy, cited by Opinion. “Is the executive ready to cut its TICPE revenues, expected at 17.4 billion euros this year and 18.3 billion next year?” wonders for its part the daily economic The echoes pointing “a public deficit of more than 8% of GDP this year”.
Additional disadvantage: it “does not make it possible to specifically target the most modest audiences”, insists a government source. And it would apply to all motorists, including owners of large cars and very fuel-hungry SUVs. Either a very negative message in terms of ecology.