French PM warned against lowering VAT on fuel
Proposal measures described as too costly by advisory body
Fuel prices have risen following disruption to global oil markets linked to conflict in the Middle East
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Prime Minister Sébastien Lecornu has been advised not to cut VAT on petrol and diesel as fuel prices rise, with a new report warning the move would be costly, ineffective and undermine France’s climate objectives.
The report, published on June 3 by France’s Conseil des prélèvements obligatoires (CPO), an advisory body linked to the Cour des comptes, argues that broad fuel tax cuts would do little to help the households most affected by higher prices while depriving the state of billions of euros in revenue.
The warning comes as fuel prices have risen following disruption to global oil markets linked to conflict in the Middle East.
The proposal to reduce VAT on fuel from 20% to 5.5% has been championed by the far-right Rassemblement National, which argues it would provide lasting relief to motorists.
Experts reject tax cut
The CPO report argues that using tax cuts to offset fluctuations in fossil fuel prices would be “counter-productive”.
Fuel VAT generated €14.8billion for the French state in 2025. Reducing the rate to 5.5% would cut revenues by more than €10billion at a time when the government is already struggling to reduce a budget deficit.
The report also says a lower tax rate would send the wrong signal as France seeks to reduce dependence on fossil fuels and encourage a shift towards electric vehicles and other low-carbon transport.
A third concern is that broad tax reductions tend to benefit all motorists regardless of income, making them a relatively expensive way to support households facing financial difficulties.
The CPO noted that previous fuel tax support measures in France and abroad often proved difficult to reverse once introduced.
Mr Lecornu has repeatedly defended a policy of targeted support rather than across-the-board tax cuts, announcing a €1.2billion package of fuel aid in May.
The measures include aid for sectors particularly exposed to fuel costs, such as haulage and fishing, in addition to help for those with low-income who are regular drivers.
Electricity taxes under scrutiny
While rejecting lower fuel taxes, the report calls for a broader overhaul of France’s energy taxation system, which it describes as complex and inconsistent.
The CPO highlighted what it sees as anomalies in the current system, including the fact that petrol is taxed more heavily than diesel and that electricity faces a higher tax burden than some fossil fuels.
France raises around €60 billion a year through energy taxation, although various exemptions and special regimes reduce potential revenues by an estimated €15 billion.
The report recommends aligning diesel taxation more closely with petrol, increasing taxation on fossil fuels over time and reducing taxes on electricity to support the country’s transition towards electrification.
Mr Lecornu has already suggested that any future tax reductions should focus on energy produced in France, “with electricity at the top of the list”.
Any such move, however, would have to be weighed against continuing pressure on public finances.
How fuel is taxed in France
Taxes typically account for around half of the pump price paid by motorists in France.
The main elements are VAT at 20%, fuel excise duty (formerly TICPE, now the accise sur les produits pétroliers), and VAT charged on that excise duty.
Rates vary slightly between departments because part of the excise duty is allocated to regional authorities.
