What can be done to lower prices at the pump? According to a study, lowering VAT or blocking prices represents “false protection”

Lowering VAT on fuels, as the RN calls for, or blocking prices, which LFI is proposing, represent "fictitious protection", analyzes the Terra Nova think tank in a study published on Wednesday. This think tank, which describes itself as "progressive", does not consider the proposal of the National Rally (RN) to reduce VAT on energy from 20% to 5.5%, and that of La France insoumise (LFI) to block prices at 1.70 euros per liter, to be "undesirable". The price of diesel reached a record in France at 2.41 euros per liter on average on September 20.

Since then, the effects of the release of part of the strategic diesel stocks at the beginning of November have been felt: the price of this fuel has decreased and reached 2.20 euros per liter on average on November 9. Price blocking, “a shortage strategy” Political proposals to contain prices are flourishing. But “general and lasting tax cuts constitute costly, poorly targeted responses,” according to the study.

Cutting VAT "would leave diesel above 2 euros", underlines the think tank, and would cost around 6 billion euros per year for fuels, or even 12 to 17 billion euros if the reduction extended to all energies. The blockade advocated by LFI would constitute “a shortage strategy”, notes Terra Nova. “A capped price below the European market would encourage foreign suppliers to deliver elsewhere and refiners based in France to export their production rather than selling it at an administered price,” explains the think tank.

The government's direction, which favors targeted aid, "is the right one", he judges. But the study prefers "automatic support indexed to the price at the pump", rather than the fuel bonus, paid by employers, or the 100 euro compensation intended for the 5.5 million low-income workers who request it.

Machine-translated from French