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Petrol heads to a two-year high

Drivers' rights group calls for tax cut as many households struggling to cope

A DRIVERS' rights body is calling for a cut in fuel tax after prices hit an almost record high.

L'Automobile Club says with prices hitting €1.43 per litre for unleaded petrol and €1.24 for diesel, many households are struggling to cope. If they rise further, as is likely with experts predicting crude oil prices to hit $100 a barrel this year, they could reach or exceed the levels during the 2008 fuel crisis, when unleaded petrol rose to €1.50.

L'Automobile Club is asking the government to find tax solutions to ease the impact on drivers, which they say the UK is looking at, too. Both countries suffer high levels of fuel tax, with the UK's prices still the highest, especially
for diesel (which represents 75 per cent of fuel consumption in France). At the start of 2011, a litre of petrol in the UK was £1.28 (€1.53) and diesel £1.32 (€1.58) on average.

The price in France is being affected by the weak euro as well as the resurgence in the global economy, which is leading to greater demand in emerging economies.

L'Automobile Club deputy general director Christian Scholly said: "It is becoming a real difficulty now for many less well-off households that need their cars because we don't all have access to good public transport; we don't all live in town centres."

He said one solution could be a "floating" version of the TIPP, the import tax on fuel. He said this was used in 2000-02 and was being considered by the UK. It means the TIPP, which is a set amount per litre, moves up or down depending
on changes in raw material cost.

Another option would be charging VAT only on the pre-tax price, not that price including the TIPP. So far Budget Minister François Baroin had ruled out the "floating" tax and said a change in the VAT system could be dealt with only at EU level. However they would continue to press for action, he said.

"He said 'no' to us the same day the British said 'that might be interesting'. People don't realise that, when they buy petrol, if you spend €1, the fuel itself costs only 20 centimes.

"As for the VAT, it doesn't matter which EU country you go to, the proportion of tax in the fuel price is high."

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