How the government and rights agreed on the fuel discount

Even before the Assembly’s examination of the texts on purchasing power began a week ago, the government had opened the door to the right: a jury vowed not to hit the stock during the debates on the draft financial rectification (PLFR) The originally planned devices provided for the gradual end of the discount of 18 cents on every liter of petrol between October 1st and December 1st. The same is true for the more targeted subsidy called the employee fuel allowance as a successor to this rebate.

Therefore, with rising prices at the pump contributing to unprecedented inflation since the early 1980s, the Executive decided to extend aid to households to refuel, as LR MPs wanted. By seeking consensus with them at all costs. New method promised by Prime Minister Elisabeth Borne: “I want that together, we give meaning and value to the word compromise, which has been forgotten in our political life for too long,” it announced two weeks ago in its general policy statement.

This weekend, an agreement was reached between the deputies of the majority and those of the right-wing LR to extend the fuel discount and bring it forward at the beginning of the school year “from 18 to 30 cents” The liter was actually built through telephone calls, lunches and discussions between Bercy, Matignon, the text’s general rapporteur, Renaissance MP Jean-René Cazeneuve and the caciques of LR. In theory, the “compromise” is built with everyone “except RN and LFI”, because we “does not work with the two extreme groups, but with the government’s opposition groups,” underlines Majority MP Charles Sitzenstuh. Which is not to say that dialogue with Republicans was easy.

“Cornered”

The traditional right initially fiercely defended a fixed price for petrol of €1.50 by only reducing taxes on fuel. A measure that Bercy panicked at around 40 billion euros for public finances, compared to 4.4 billion euros planned by the government. But even at LR, the proposal was not unanimous, especially among the party’s senators.

Therefore, during the discussions in the assembly on Saturday 23 July, the Minister of Economy and Finance, Bruno Le Maire, revealed the content of the compromise reached with the right within the framework of a “commitment to the bank”: the prolongation of the fuel measure will recorded in a decree and not put to the vote. Therefore, if you leave the targeted allowance, the discount will increase to 30 cents in September and October, then to 10 cents in November and December. “The state is providing its protection and responding to Republican expectations […]. We therefore arrive at a petrol price that can reach 1.50 euros in September by accumulating discounts [avec celle de 20 centimes accordée par TotalEnergies dans ses stations, ndlr], with a strong incentive for other tankers to follow suit,” greeted Bruno Le Maire.

Incidentally, this compromise made it possible to evacuate the proposal for a tax on the super-profits of the energy multinationals, which Total wanted to avoid at all costs and which it did not want the government to implement at all, as demanded by the left but also by some right-wingers.

The corresponding amendment by the socialist Christine Pirès Beaune was narrowly rejected with 96 votes in favor and 114 against. Bruno Le Maire reiterated his conditions on Friday 22 July in the Hemicycle, at the start of the PLFR review. “I set only one limit: our public finances”, he had said. He also said: “We are ready to discuss an increase in this fuel rebate, provided that the total amount of the transshipment does not exceed the 4.4 billion euros foreseen for fuel in this text.” Far from the 40 billion that the LR Group wanted. “They had cornered themselves and there they found a way out from above,” was analyzed in government. Indeed, on the podium that same Friday, Véronique Louwagie, LR Vice-President of the Finance Committee, presented her new shopping list and her “requirements”. She considered the “18-cent jump far too little” and called on the government to give up “This new tank check is aimed at just a few.” If she had kept up the wish for a liter of petrol “must get closer” From EUR 1.50, the way there was different, since it took into account the discount of 20 cents announced by Total on Friday and no longer provided for a tax reduction. A first step towards government.

Oil prices have also stabilized in recent days, around $100 a barrel, still up 43% from a year ago. At petrol stations, where the price for a liter of diesel and unleaded95 has fallen from its peak in mid-June, until it falls below 2 euros again after deducting the government-funded discount of 18 centimes per liter.

gradual

But this government rebate, hastily introduced on April 1, has many flaws. Not only is this expensive for public finances, costing €800 million a month at 18 cents, but this fossil fuel subsidy conflicts with the state’s green transition discourse. After all, it does not benefit those who need it most. On Thursday evening, the Economic Analysis Council published a study based on bank data with a certain sense of time. “These data thus confirm the intuition that the 18-cent discount on the pump price is regressive,” the authors note. In fact, the wealthiest households benefited in euros, with the subsidy multiplied by two between those in the tenth decile and those in the first decile: approximately €18.50 vs. €9.50.

The government was well aware of these limits and had therefore planned to gradually phase out this rebate: the bill stated that it would decrease from 18 to 12 cents in October to 6 cents in November and expire on December 1st. Workers’ compensation was to come in the form of a premium of between 100 and 300 euros depending on income, household composition and distance traveled.

In the end, the government and the right almost doubled the discount to 30 centimes after Yalta. Where we see once again which side has the relative majority. “What a surprise that the majority reached an agreement with the LR deputies. It’s a beautiful happy ending.” scoffed communist MP Nicolas Sansu. “They wanted to please LR, not PS, as we see with the socialists. LR was successful with its flagship proposal. On Friday, Bruno Le Maire did not hide it and multiplied the references to the LR deputies: “Thank you for the gestures you made in our direction, we will be able to respond.” It is finished.