France To Hike Tax On Diesel

October 5, 2015 Taxation in France

PARIS – The government of France may be caving to public pressure to reduce the tax benefits for diesel, as evidence mounts that the fuel is more damaging to the environment than petrol.

In a television interview aired on October 4th the Environmental Minister of France Segolene Royal said that car manufacturers and consumers will soon need to prepare for the day that the government will drop the tax subsidies currently available for diesel.

Currently the rate of fuel tax levied on diesel is EUR 0.15 per litre lower than on petrol.

The Minister indicated that the government is now looking at measures to reduce the comparative tax advantage over the course of the next 5 years, although she did not commit to a timeline for the implementation of any tax hikes to diesel.

The government has recently faced increasing pressure to end the subsidization of diesel, due to growing concerns on the environmental and health impact that emissions from diesel vehicles may have.

Further, the recent scandal regarding diesel vehicles manufactured by VW has given the government an extra push to address the tax treatment of the fuel.

It is estimated that approximately half of the entire car fleet in France is diesel, however in recent years the number of new diesel cars sold is falling compared to petrol.

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