France demands VAT cut to help with fuel prices
France is calling for a Europe-wide cut in VAT to reduce fuel prices. President Nicolas Sarkozy said today the move would help offset high prices at the pump.
“If the barrel continues to rise must we maintain a VAT rate that is proportional to the price in the same conditions?” he asked.
The price of a barrel has risen above $133 (€84).
The decision on lowering the VAT “must be European,” Mr Sarkozy said on French RTL radio, adding that he was “launching the proposal.”
He said he was also looking at creating a fund to French people in need, such as fishermen, with the revenue generated by the rising tax on oil prices.
Fishermen have blocked French ports for more than a week to protest at rising fuel prices, which they say risk putting them out of business. Some look to extend the action to a Europe-wide level.
Finance Minister Christine Lagarde said today that consumer nations must ask oil producers to do something about the rising prices. She said she had already asked counterparts within the Group of 7 richest nations to “discuss this issue among consumer nations” so it can be presented to producing countries.
“We cannot eternally be in a market mode where the price climbs endlessly to the benefit of producers,” she said.
