France’s decision to halt fuel tax hike after a series of street protest show how unpopular but necessary economic reforms can be difficult to implement in any economy whether developed or under developed. Most Nigerians can still remember how a similar protest in 2011 forced the previous Goodluck Jonathan administration to reverse a decision to reverse removal of fuel subsidies. Since that reversal, the country has spent close to N5 trillion on fuel subsidies, about twice what it has spent building roads within the same period.
French Prime Minister Édouard Philippe announced on Tuesday that the French government would temporarily suspend the controversial carbon tax plan designed to curb fossil-fuel consumption, stating that people’s anger must be heard, and the measures would not be applied until there had been proper debate with those affected.
France has the largest percentage of diesel cars on the road, more than any other country in Europe, and the hikes in prices are a part of the country’s commitment to phase out gas and diesel vehicles by 2040. However, the actions have not gone down well with many French people, sparking series of street protests.
“Yes, there would usually be popular resistance to difficult reforms. But if the political class and wealthy, ruling elite are determined to implement them, they can,” Rafiq Raji, chief economist at Macroafricaintel said.
Raji said past French governments were not able to implement as much reforms as were needed; it is to Macron’s credit that he has managed to get this far
“Still, it has come at a cost; as now, his popularity has waned,” Raji told BusinessDay.
Ayo Akinwumi, head of research at FSDH said the primary duty of government anywhere in the world is to ensure they use the instrument of the law or the power of the law to improve the wellbeing of the people however the way they communicate that is very important for the people to buy into it.
“They probably didn’t engage the affected people well enough to get their buy-in which is why they protested,” Akinwummi told BusinessDay.
The decision marked the first time that Macron has backed down from implementing an unpopular policy in his 18-month presidency as a result of the furious public response, and is set to unleash even more protests as the emboldened French people now realize that taking to the streets will results in success.
Not surprisingly, Saudi Arabian Energy, Minister Khalid Al-Falih attacked France’s attempt to raise taxes on fuel and warned other governments of the risks to making fuel more expensive. It is in the interest of Saudi, like Nigeria, for crude oil to remain the main energy source cars.
“What’s happening in France and in many European countries are governments unreasonably taxing energy to basically subsidize other policies they have,” said Al-Falih in an interview at the United Nations climate talks in Poland.
It is not surprising for Saudi Arabia, the world’s largest oil exporter, to directly condemn the oil policies of consuming nations and the comments run against efforts to reduce global demand for fossil fuels to mitigate the impact of global warming.
But there’s more to it than diesel prices, of course: Many of those sympathetic to the yellow vest movement say that the poorest citizens are being forced by the government to carry the greatest burden of the fuel tax. The argument is that those least able to afford to do so are carrying most of the weight of the government’s anti-pollution agenda, as was the case with the recent ban on older cars that was viewed as discriminating against the city’s poorest residents.
French authorities have indicated that fringe groups had infiltrated the protests and were responsible for some of the worst clashes with police, which saw liberal use of tear gas and water cannons all through the center of Paris.
It is difficult to predict where this wave of protests will take the country, but there are plenty of issues that are fuelling this movement beyond the tax on diesel.
The “gilets jaunes” (yellow vests) a protest which has grown via social media and has supporters across political spectrum has now grown to reflect more widespread anger at the government. “Yellow vests” are so called because they have taken to the streets wearing the high-visibility yellow clothing that is required to be carried in every vehicle by French law.
“It is a first step, but we will not settle for a crumb,” said Benjamin Cauchy, one of the leaders of the protests.
Marine Le Pen, leader of the far-right party National Rally (formerly the National Front), tweeted: “A moratorium on taxes is being considered. But a moratorium is only a postponement.”
Republican Senator Bruno Retailleau described the moratorium as a reprieve and “absolutely inadequate.” He said the French people called for “a cancellation.”
Facing the most serious street protests since his election in May 2017, Macron has cancelled a two-day trip to Serbia to stay in France this week.
President Emmanuel Macron, who won the French presidential election in a landslide in 2017, has struggled to maintain his popularity, with critics accusing him of being out of touch with the concerns of ordinary people.
The riots easily the worst in decades have been sparked by a diesel tax as part of the current government’s climate agenda: Emmanuel Macron’s administration introduced higher fuel taxes along with incentives for electric cars, as part of his platform of fighting climate change with the long-term targets of reducing carbon emissions by 40 percent by the year 2030, and phasing out gas and diesel cars by 2040.
The opposition to the gas and diesel taxes was greatly exacerbated by a 22-percent hike in diesel prices within the last 12 months as a result of market factors: Protestors fear that a further tax on diesel and gas will have a significant economic impact on daily life.
The wider implication for metropolitan areas seen in the protests the most violent in France in recent memory is a pushback against an anti-pollution agenda that exacts even an incremental cost for those less able to cope with the economic burden.
Another troubling implication is that the protests are not affiliated with any political party, especially any party with a declared anti-green stance, signaling that economic conditions and social media coordination are themselves enough to cause thousands to riot in a major European capital.
The introduction of higher fuel taxes followed the city’s ban on older gas and diesel vehicles that was phased in over a year ago that also caused consternation among a segment of the population, which saw it as a tax on poor but not car-less residents, but failed to lead to violent protests.
Recent polls have shown that most of France supports the cause of the yellow vests. Similar protests have broken out around Europe, spreading to Belgium, Italy and the Netherlands.
Tags: Fuel Tax