President Nicolas Sarkozy said Tuesday that he'll ask France's European Union partners to curb value-added tax on fuel to counterbalance further hikes in oil prices.
"The price of the barrel keeps rising," Sarkozy said in an interview on RTL radio. "Are we going to make the VAT increase in the same measure?" "I propose to stabilize it," Sarkozy said.
"If oil keeps rising, shouldn't we put on hold value-added tax on the price of oil?" Sarkozy said. "Put on hold means that the VAT wouldn't be applied" past a certain threshold, he explained, without elaborating.
Like other European countries, France is confronted with record gasoline prices, which reached a historical high as oil climbed to around $135 a barrel. VAT rates on fuel and other products have to be at least 15% in all E.U. member countries, and a change in the current regulation would require unanimous agreement among all member states.
A presidential spokesman said there's still no clear plans as to how France will bring up the issue with E.U. partners.
Fishermen have been blocking French ports for over a week now to protest rising gasoline prices, which they say are driving them out of business. Bowing to the pressure, last Friday Prime Minister Francois Fillon promised a EUR110 million emergency aid package. Still, the funding needs to be approved by Brussels-based regulators. France intends to take the issue to other international forums to force action from oil producers.
Finance Minister Christine Lagarde also said on Tuesday that G7 countries, scheduled to meet in Osaka in June, should ask oil-producing nations to boost their output to address worries about the rising price of oil.
Lagarde said she asked her counterparts in the Group of Seven to "discuss this issue, among consumer nations," and to "present it to producing countries."
The president, who flew to Angola Friday to secure a share of the two million barrels of oil a day the country is planning to produce, outlined Tuesday an emergency plan to counter the oil emergency.
He pledged to boost investment in renewable energies and the output of oil-saving goods. Sarkozy said that during the French presidency of the E.U., he will be pushing for a reduced-rate VAT on environmentally-friendly products. Sarkozy also encouraged those more affected by the hike in gasoline prices to pass on their increased costs to consumers.
If it's more expensive to organize road transport, it's normal that the transport company can pass the increased costs on to consumers, Sarkozy said.