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France considers re-introduction of a 'Floating Fuel Tax’

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Posted / Last update: 20-08-2012
French Finance Minister Pierre Moscovici has recently announced that the government intends to take “appropriate measures” at the end of August to halt rising fuel costs at the pumps, explaining that the idea of reintroducing a “floating” tax on fuel is one of the avenues currently being explored

Socialist French President François Hollande advocated during the run up to the presidential elections back in April that fuel prices be frozen for a period of three months, and that a floating domestic tax on petroleum products (taxe intérieure sur les produits pétroliers – TIPP) then be reinstated for petrol and diesel, lowering taxes when oil prices rise and raising duties when prices fall. Due to the subsequent drop in oil prices, Hollande’s plans were not implemented.

Conceding that the issue has once again arisen, Moscovici provided his reassurances that the government will ensure that in the coming months fuel prices do not exceed current levels. The government has tasked the General Inspectorate of Finance and the General Mining Council with analyzing oil industry prices, and a report is expected on August 24.

On the basis of the report, discussions will take place with refining and distribution companies on August 28 to consider conditions for fixing prices, the finance minister informed, noting government plans to then act.

The minister confirmed that the government is considering several options to halt price rises, namely blocking prices, implementing mechanisms to enable the country’s least well off to benefit from price reductions and introducing the floating tax system.

The idea of reinstating the floating tax on fuel is not new. Former French Finance Minister François Fillon ruled out the idea of “blocking” fuel prices, and of reintroducing a floating tax on fuel to curb excessive fluctuations in the price of petroleum products back in March.

The minister also explained that part of the country’s TIPP tax is governed by the regions, led predominantly by left wing parties, and pointed out that this part has continued to increase.

The French union of petroleum industries (UFIP) had stated that it would be “feasible” to block fuel prices by reducing taxes, while conceding that such a measure would be costly.

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