PARIS (Reuters) – As President Emmanuel Macron’s government attempts to limit the damage to his economic record from soaring energy costs six months before a presidential election, on Monday, officials in France broached the idea of petrol coupons for low-income people.
Due to an increase in energy prices globally following the pandemic economic recovery, the government has raced to put a ceiling on gas and electricity rates and raise subsidies for the needy in recent weeks.
The economy had been seen as Macron’s strong suit moving into the April election, in which he is largely anticipated to seek a second five-year term once the COVID-19 issue settles, with economic growth likely to surpass 6% this year.
However, the rise in prices might damage his presidency’s legacy by erasing the increases in buying power that were primarily fueled by tax cuts during his leadership.
Indicator of the rise in French family buying power
There has been increasing pressure on the government to lower the taxes drivers pay at the pump, which may account for up to 60% of what they spend.
Although this would be costly to the public purse, Finance Minister Bruno Le Maire pointed out that the government was now working hard to wean the economy off fossil fuels, thus it would amount to a subsidy.
In an interview with Europe 1 radio, Finance Minister Bruno Le Maire stated, “I prefer petrol certificates to a reduction in taxes.
Environment Minister Barbara Pompili also argued for gas coupons on French television, but she emphasized that implementing them would be difficult.
VESTS IN YELLOW
Due to the fact that energy prices account for a significant portion of family budgets in France, taxes on energy are a touchy subject. These taxes were at the center of protests by people known as “Gilets Jaunes” because of the bright yellow vests they wear during their weekly rallies.
In recent Yellow Vest demonstrations, reduced buying power has emerged as a major topic once more.
At a demonstration earlier this month, one protestor told Reuters TV that “there are mothers-of-two who have to choose between paying their electricity bill and feeding their children”.
“And therein is the problem: when we’ve paid the electricity bill, what are we left with?”
The 2018 tax hike on fossil fuels sparked the Yellow Vest protests, which resulted in some of the worst street violence in Paris in decades.
Protests against Macron and elitism in general erupted into a larger movement, which only waned as Macron’s administration attempted to improve families’ purchasing power by cutting income taxes by 5 billion euros.
According to the Treasury’s annual economic and social report released earlier this month, thanks to these tax cuts and other measures, disposable income will have grown twice as fast under Macron’s presidency as it did under his predecessors, socialist Francois Hollande and conservative Nicolas Sarkozy.
According to polls, a majority of French believe that during Macron’s presidency, their purchasing power has been squeezed. Macron’s administration recognizes that the figures do not always match the public’s impression.
As a result, the government has set a ceiling on retail gas prices until March, when it expects the recent rise in prices to subside.
It also intends to reduce the power surcharge in order to keep the price increase in the first half of 2022 to just 4% instead of the usual 13%.
Meanwhile, the budget for energy-coverage coupons for low-income households has been increased by 600 million euros.