French riots: How a fuel tax increase sparked violent protests

By PoliticsFOXBusiness

France’s Macron tested as fuel tax protests turn violent

“Bulls & Bears” panel on the fuel tax protests in France.

The French government postponed a proposed increase in the country’s fuel tax on Tuesday, following violent protests and even the defacement of some highly-regarded landmarks and storefronts.

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The postponement – for six months – is a meaningful reversal of policy for President Emmanuel Macron’s government, which has stood by its plan to raise the tax on gas and diesel fuel. Protesters, known as “yellow vests” for the garments they wear, have taken to the streets throughout recent weeks in violent confrontations with police across the country, including Paris, where the famous Arc de Triomphe was smashed. Scenes also included burning cars and broken store windows.

The protests were so severe that government officials even considered implementing a state of emergency.

While the tax plan called for an increase of only about a few cents per liter, experts say it’s not surprising the proposal became a rallying point for residents.

“France has had too many taxes and too many regulations as a result of its ... big government mentality and its massive spending,” Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, told FOX Business. “The French people are fed up with it.”

The fuel tax was intended to promote higher adoption of electric vehicles, but stagnant economic conditions mobilized masses – in a protest that began last month on social media.

“I think it’s hard to overstate what very low level of growth for many years does to a country,” de Rugy said. “It’s been a long time since France has been a vibrant economy where people had a feeling that they’re really moving ahead.”

GDP in France is grew by 2.3 percent last year, while it inched along at 1.1 percent in 2016, according to data from the International Monetary Fund. Growth projections for the current and coming years are lower than 2 percent.

Further, much of the rural community, which is more dependent on cars, has been left behind.

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France has one of the highest tax-to-GDP ratios, at more than 48 percent in 2017, compared to 40.2 percent in the EU overall. Some of the fees citizens and businesses pay include a value-added tax, a gas tax and taxes to promote social welfare programs.

Meanwhile, the country also has the highest level of public spending, with a debt load that’s equal to nearly 100 percent of GDP.

Despite Tuesday’s decision, the conflict between protesters and the government could carry on. The yellow vests had not yet indicated whether the government’s announcement on Tuesday would be enough to calm demonstrators, as reported by The New York Times.