The Limited Times

Now you can see non-English news...

“Inflation compensation”: why not simply abolish VAT on taxes?

2021-10-29T13:32:11.918Z


MACRONOMETER - Ifrap gives a score of 4/10 to the aid announced by the government. Every week, the liberal think-tank assesses government policy in Le Figaro.


The Ifrap Le Figaro rating

The government has just announced an “inflation compensation” of 100 euros in the face of rising fuel prices, the prices of which at the pump now reach 1.5531 € / L for diesel and 1.6223 € / L for gasoline, record prices, beyond those of 2018.

This aid will be received by all households having, per person, an income of less than € 2,000 net per month. 38 million French people will therefore receive a payment of € 100 between the end of December 2021 and January 2022, for a total of 3.8 billion in expenses. Prime Minister Jean Castex affirmed that the objective was to compensate for general inflation, which reached 1.9% in August 2021. Except that, in France, more than half the price of a full tank of gasoline is due taxes: they represent 55.6% of the price for diesel and 58.2% for unleaded 95. Then, the rest of the price is divided, for a third on the cost of fuel leaving the refinery (33, 9% for diesel, 32.6% for unleaded 95) and 10% on distribution costs.

Read alsoFuels: what share of taxes in the price you pay at the pump?

These taxes are made up of TICPE and VAT.

The TICPE aims to discourage the use of products that are harmful to the environment according to the polluter pays principle.

Since 2014, it has included the carbon component, the price of which was frozen at € 44.6 / t after the yellow vests crisis.

The percentage of 20% VAT is applied both to the price of fuel and also to the TICPE.

TICPE should bring in a total of 33 billion euros in 2022. It can be estimated that this year, the French and French companies pay around 5 billion euros in VAT on the TICPE tax.

A regrettable choice

It seems that the government would have hesitated between a reduction in VAT to 5.5% on fuels which would have caused a decrease in public revenue of 10 billion euros and this inflation "check" to 3.8 billion which will cost the budget of the State 1.5 billion in 2021 and 2.3 billion euros in 2022. A regrettable choice because this measure is the illustration of the retreat to better jump. It appears, in fact, obvious that because of the inflation which is setting in and which should last for many months, the aid provided will not be enough. It would have been more readable, more empowering for the French to abolish taxes on fuel taxes and potentially also on electricity and gas. It would also mean not taking any morewith one hand what the government is then obliged to return with the other to calm the scolding.

Admittedly, abolishing taxes on taxes has a cost for the State: just on fuels, that would be 5 billion less revenue, but when we add the 3.8 billion with the previous extensions of the energy check (580 million d 'euros), the effort to control gas prices (1.2 billion) and the tariff shield (5.9 billion cost), we have already greatly exceeded this amount in various and varied checks. Especially since the latter may still have to be increased in the coming month.

The government is therefore miscalculating, it thinks that the checks added will cost it less than the abolition of VAT on energy taxes.

And above all, the State wants to keep its revenues from environmental taxation that it assesses itself for 2022 at more than 67 billion euros.

That said, in the middle of the presidential year and in the face of foreign examples (Spain in particular), it is not impossible that the coming months will inform us of the abolition of VAT on taxes weighing on energy (TICPE, TICFE, TICGN and CTA).

Source: lefigaro

All news articles on 2021-10-29

You may like

Trends 24h

News/Politics 2024-03-28T06:04:53.137Z

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.