PARIS (Reuters) - In the wake of violent protests across France sparked by planned tax rises on gasoline and diesel the government is considering lowering taxes on electricity, two sources familiar with the situation told Reuters on Thursday.
Prime Minister Edouard Philippe announced late on Wednesday that he was scrapping the fuel tax increases planned for 2019, having announced a six-month suspension the day before, in a bid to defuse the worst crisis of President Emmanuel Macron’s presidency.
The government also said it would prevent state-controlled EDF from raising its regulated power prices this winter, but rivals said they would challenge that decision in court.
Earlier government attempts at freezing prices have been overruled.
Household power prices are set by independent energy regulator CRE using a formula that includes the price of power generation, transport and distribution. A third part of the retail price is made up of taxes.
“What is being discussed is that the share of taxes in the power price could be reduced in order to compensate for an increase in the generation cost, which on balance would keep prices stable,” said one of the two sources.
The government could lower the valued-added tax (VAT) or so-called CSPE tax, which stands at 22.5 euros per megawatt-hour and raised 3 billion euros ($3.40 billion) this year. Money from that tax also funds power subsidies for low-income families.
An energy ministry official told Reuters that the government was looking at ways to stabilize power bills but said that no final decision had been taken yet.
Reporting by Benjamin Mallet; writing by Geert De Clercq; editing by Sudip Kar-Gupta and Jason Neely