France’s new president, Francois Hollande, has followed through on an election promise to lower taxes on fuel. The idea is to give hard pressed French drivers a break and hopefully stimulate the economy.
No details have been released yet, they will follow after consultations have taken place with consumer groups and the oil industry.
France Prime Minister Jean-Marc Ayrault said the “modest and temporary” tax cut means the government would be able to ask the oil producers and distributors to also do their bit.
The move won’t help France’s deficit which the government is struggling to slash: every one centime in tax trimmed off a litre of fuel means the French Treasury loses 125 million euros every quarter.
Taxes make up about half of the pump price of petrol and diesel in France, which reached on average 1.58 euros a litre and 1.41 euros a litre respectively at the end of last week. That is according to calculations from the French oil industry lobby UFIP.
Italy’s drivers may soon be lobbying their government for similar help.
Petrol prices there have just broken the two euros a litre level on higher crude costs and August holiday demand, making it the most expensive eurozone country.
Brent crude oil prices have risen by more than a third in less than two months, but the fall in the euro against the dollar in the last few months means the pain is particularly acute in the eurozone, with oil prices in euro terms reaching levels unseen since their 2008 peak.