Can the National Rally really lower VAT from 20% to 5.5% on fuel and energy prices, as Jordan Bardella claims? During his press conference last Monday, the president of the RN declared that his party’s proposal, Marine Le Pen’s promise in 2022, was “ perfectly possible in the current European framework “.
“ No need to reform European directives to reduce VAT. I remind you that a few months ago, Poland […] lowered the VAT on its fuels to a rate of 8.5%, this posed no difficulty for the European bureaucracy “, said the president of the RN.
“ For the rest, it is perfectly possible to reduce VAT on energy. A certain number of countries have done it, in fact I believe that Germany did it during the inflation crisis […], so there is case law on the subject “, he added.
What do the European rules say?
As a reminder, the EU prohibits lowering VAT on fuels to the reduced rate – i.e. 5.5% in France – to remain in compliance with the Green Deal and the decarbonization objective. According to Article 98 of the 2006 European Directive on the common VAT system, “ the reduced rates apply only to deliveries of goods and services of the categories listed in Annex III “. In detail, we find foodstuffs, water distribution, pharmaceutical products… but not fuels.
Gas, electricity and fuel oil, which are considered essential goods, are not affected by this ban. However, countries must first consult a committee composed of representatives of the Member States and the Commission, which is responsible for promoting the uniform application of the provisions of the VAT Directive.
” HASafter consultation of the VAT committeeeach Member State may apply a reduced rate to supplies of natural gas, electricity or district heating ”, according to Article 102 of the VAT Directive.
From a community law point of view, the RN could therefore implement the minimum VAT rate on gas, electricity and fuel oil, after obtaining the vote of the French Parliament.
A temporary reduction in VAT on fuels
Concerning fuels, in February 2022, Poland had, as Jordan Bardella says, reduced VAT on fuels from 23% to 8%. In August 2022, the German government, for its part, decided to temporarily lower VAT on gas, from 19% to 7%. The stated objective is to help consumers face the surge in prices triggered by the war in Ukraine.
But according to Nicolas Goldberg, energy expert at Colombus Consulting, these measures are only authorized “temporarily “. The specialist recalls that “ It only lasted six months, no more » in the case of the reduction in VAT on fuels in Poland. The measure only applied from January 1 to July 31, 2022. In Germany, the reduction in VAT on gas ran from October 1, 2022 to March 31, 2024.
Last Friday, the outgoing RN deputy and candidate for the legislative elections in the Somme, Jean-Philippe Tanguy, was himself cautious. He affirmed on RTL that the RN intended to obtain a “ temporary exemption » from the Commission to be able to reduce VAT on fuel to 5.5% « from this summer “. “ I’ll be honest with you, where the negotiation is more difficult is on fuel. “, he admitted, referring to the need to put in place a “ balance of power » to obtain an exemption from the 27.
“ Exceptional and justified »
Above all, the measure must be “ exceptional and justified », According to Nicolas Goldberg. “ In the case of Germany, it was to compensate for the effect of the long-term contracts of which they were prisoners with Russia », he recalls. And for Poland – as for Germany -, “ this took place in a context of crisis, while today oil prices are at their lowest since 2021 », adds the specialist.
Phuc-Vinh Nguyen, researcher on European and French energy policies within the Energy Center of the Jacques Delors Institute, also specifies that “ LPoland had unilaterally reduced VAT on fuel and then the Commission had come along and asked for it to be stopped “.
“ It was therefore not an authorized exemption as such, but it was not sanctioned retroactively due to the fact that it was the peak of the crisis. », recalls the specialist in European energy policy. When contacted, the European Commission did not respond to requests from The gallery.
“ I don’t see why France would take such a step », considers Nicolas Goldberg. “ If there is no justification, this may be refused. There may also be a matching requirement, so it’s not that simple “, he says. In the event of force, France “ would be in violation ” and would expose himself to “ Sanctions “, according to him.
Last resort for the National Rally to lower VAT on fuels: reform the 2006 directive relating to the common VAT system. “ But it would take unanimity » of member states, points out Phuc-Vinh Nguyen. “ Suffice to say that it is unlikely, if not impossible. “, believes the researcher from the Jacques Delors Institute, who recognizes that the EU offers more ” latitude » to reduce VAT on other energies at the national level.
A contested effectiveness
Beyond the possibility of implementing such a measure, Nicolas Goldberg doubts its effectiveness. It is not because VAT falls that fuel prices necessarily fall in the same proportions at the pump. The distributor is not obliged to pass on the entire reduction “, he explains. In this regard, he recalls that in 2009, the reduction in VAT to 5.5% in catering benefited restaurateurs more than consumers.
Another risk? “ If France applies it alone in its own corner, the reduction in VAT on fuels could be dangerous and artificially create shortages », warns Nicolas Goldberg. During the crisis, the reduction in taxes at the pump worsened the fuel crisis that followed behind “.
In summary, the RN’s proposal to reduce VAT to 5.5% on gas, electricity and fuel oil is possible after consultation with a prior European VAT committee. On fuels, however, the reduction in VAT is prohibited by European rules, unless exempted on a temporary and exceptional basis.
A measure worth 17 billion euros according to Bercy
According to the Ministry of the Economy, the reduction in VAT to 5.5% on energy would cost nearly 17 billion euros to public finances. In detail, the reduction in VAT would represent a shortfall of 10 billion euros for “ gasoline », 4.5 billion euros for electricity and 2.3 billion euros for gas, specifies Bercy.
Asked about the financing of this measure last Friday, Jean-Philippe Tanguy assessed it as: between 12 and 16 billion euros over a full year “. For the last six months of 2024, the money recovered thanks to the elimination of the tax loophole for shipowners, “ it’s between 5 and 6 billion ” of revenue, he said, without giving further details. For the rest, the RN counts “ ask for a small discount of 2 billion » of France’s contribution to the European Union budget.