France has scrapped all petrol price hikes for 2019, the environment minister said Wednesday, following weeks of violent protests against shrinking income blamed on President Emmanuel Macron's government.
A price hike scheduled for January 1, was “scrapped for the year 2019” in its entirety, Francois de Rugy told BFM TV. This was done to assuage fears that the increase would be postponed only to be reintroduced once the protests stop, he said.
The Macron administration is struggling to defuse the anger driving the “yellow vest” protests, as it reels from the worst riots seen in central Paris in five decades last Saturday.
Government spokesman Benjamin Griveaux said all tax-related policies needed to be periodically evaluated and, if deemed not to be working, should be changed. He said the wealth tax could be reassessed in the autumn of 2019.
“If a measure that we have taken, which is costing the public money, turns out not to be working, if it’s not going well, we’re not stupid - we would change it,” Griveaux told RTL radio.
The unrest over the squeeze on household budgets comes as OECD data showed that France has become the most highly taxed country in the developed world, surpassing even high-tax Denmark.
Griveaux later told a weekly news conference that Macron had called on all political parties, trade unions and business leaders to press the need for calm.
Student protests and planned trade union strikes in the energy and port sectors next week underscored the risk of contagion.
A Macron aide denied that any eventual revision of the wealth tax would represent a major climb-down by Macron, a pro-business former investment banker, adding that the president remained committed to his reform drive.
Griveaux defended Macron’s decision last year to narrow the wealth tax - known in France as “ISF” - to a tax on real estate assets, rather than all of an individual’s worldwide assets, from jewellery to yachts to investments, over the value of 1.3 million euros ($1.5 million).
Those changes earned Macron the label “president of the rich” among the hard-pressed middle class voters and blue-collar workers who criticize the president for pursuing policies that favor the wealthy and do nothing to help the poor.
Griveaux said the wealth tax reform had not been “a gift to the rich” and was aimed at encouraging wealthy individuals to invest more in France.
“This money was to be invested in our SMEs for them to develop, innovate and hire. If that is not the case ... then we can reopen it for discussion.”
The “yellow vest” movement - so-called because of the high-vis jackets worn by protesters - began with the aim of highlighting the squeeze on household budgets caused by fuel taxes but morphed into a broader, sometimes-violent rebellion against 40-year-old Macron.
His administration’s shift on fuel tax came after rioters ran amok in central Paris, torching cars, looting boutiques vandalizing cafes and private residences and cafes in affluent neighborhoods.
Prime Minister Edouard Philippe said the six-month suspension to the carbon-tax would be used to examine other measures to bolster household spending power.
It marked the first major U-turn by Macron in his 18-months in office, at a time polls show that barely one in five French people think he is doing a good job.
US President Donald Trump appeared to mock Macron over the policy shift, which could make it harder for France to meet its CO2 emissions reduction target, a core element of the Paris climate agreement of 2015.
“I am glad that my friend @EmmanuelMacron and the protestors in Paris have agreed with the conclusion I reached two years ago,” Trump tweeted late on Tuesday, as UN climate talks take place in Poland.
“The Paris Agreement is fatally flawed because it raises the price of energy for responsible countries while whitewashing some of the worst polluters.”
Adding to Macron’s difficulties, college students are agitating and the hardline CGT trade union on Wednesday called for strikes in the energy industry and at ports on Dec. 13.
“We too want a freeze on the planned closures of coal plants,” the CGT union said in a statement.
Meanwhile, Total said a rising number of its filling stations were running dry as a result of “yellow vest” road blocks.