Macron re­verses fuel-tax hike af­ter yel­low vest protests

Tehran Times - - ECONOMY -

French Pres­i­dent Em­manuel Macron’s gov­ern­ment re­versed course and sus­pended a planned fuel-tax hike that had sent as many as 300,000 protesters into the streets for three weeks in some­times vi­o­lent clashes.

Prime Min­is­ter Edouard Philippe an­nounced the de­ci­sion af­ter de­tail­ing the plan in his reg­u­lar Tues­day morn­ing meet­ing with gov­ern­ing party law­mak­ers.

“No tax mer­its putting the na­tion in dan­ger,” Philippe said in a tele­vised ad­dress. The mea­sures he an­nounced didn’t in­clude the sup­ple­men­tal in­crease in the min­i­mum wage de­manded by protesters.

The climb­down is a rare re­treat by Macron, who has prided him­self on stick­ing to his poli­cies and ig­nor­ing his tum­bling pop­u­lar­ity rat­ings. He’s con­sis­tently de­fended the higher gaso­line taxes, say­ing they are needed to wean the coun­try off fos­sil fu­els and have been com­pen­sated for by cuts to pay­roll taxes.

Even be­fore it was of­fi­cially an­nounced, Mem­bers of Macron’s Re­pub­lic on the Move saluted the turn­around, say­ing it would help calm Yel­low Vests protests. Yel­low Vests and op­po­si­tion par­ties said it was too lit­tle, too late.

“It’s a first step that could have come weeks ago with­out all the ran­cor,” Ben­jamin Cauchy, an early or­ga­nizer of the Yel­low Vests, said on BFM TV. “But the French won’t be sat­is­fied with just crumbs, they want the whole baguette.” He said he wanted all re­cent gaso­line tax hikes rolled back, and higher taxes on multi­na­tional com­pa­nies.

Stanis­las Guerini, the head of Macron’s party, said on RTL Ra­dio that a mora­to­rium on new gaso­line taxes would al­low a de­bate on France’s en­ergy poli­cies to take place in a “calmer at­mos­phere.”

Ma­rine Le Pen, head of the far-right Na­tional Rally party, which has sup­ported the Yel­low Vests in hopes of cap­tur­ing their votes, said on Twit­ter that “a mora­to­rium is just a de­lay. That clearly doesn’t live up to the ex­pec­ta­tions and the pre­car­i­ous­ness in which the French peo­ple are strug­gling.”

Mar­kets showed lit­tle re­ac­tion: The bench­mark CAC 40 stock in­dex was down about 0.7 per­cent at 12:45 a.m. in Paris, broadly in line with de­clines else­where in Europe.

The turn­around comes as Macron’s pop­u­lar­ity hit a new low. A poll by Ifop for Paris Match mag­a­zine and Sud-Ra­dio re­leased Tues­day found the pres­i­dent’s sup­port had fallen six points to 23 per­cent. Philippe was at 26 per­cent. While Macron and par­lia­ment, where his party holds a ma­jor­ity, don’t face new elec­tions un­til 2022, the rev­er­sal on taxes may un­der­mine the rest of his re­form agenda.

Ris­ing deficit

Ecol­ogy Min­is­ter Fran­cois de Rugy told RMC ra­dio Nov. 30 that a three-month mora­to­rium on planned fuel-tax hikes would lower gov­ern­ment rev­enue by 650 mil­lion eu­ros ($740 mil­lion). Any tax cuts and spend­ing in­creases to mol­lify the protesters would raise fur­ther un­cer­tainty over the path of France’s bud­get deficit, which is al­ready head­ing close to the 3 per­cent limit im­posed by the Eu­ro­pean Union.

The grass­roots, lead­er­less Yel­low Vests are is strug­gling to struc­ture them­selves. Philippe’s of­fice said that a meet­ing planned later Tues­day with self-de­clared rep­re­sen­ta­tives of the move­ment had been can­celed; in­vi­tees were said to have re­ceived death threats from fel­low protesters. The name yel­low vests comes from the col­ored gar­ments mo­torists are re­quired to keep in their cars for emer­gen­cies.

French Prime Min­is­ter Edouard Philippe de­parts af­ter an­nounc­ing the fuel tax sus­pen­sion on Dec. 4.

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