Faced with successive increases in the regulated gas tariff in recent months, Jean Castex promised that the government had the means to act. The Prime Minister assured Tuesday that he could play on the fiscal lever “in case of necessity”. This decision would apply if “international gas prices do not fall again in the spring” 2022.
Asked during questions to the government by the head of PS deputies Valérie Rabault, Jean Castex indicated that an amendment would be tabled in the 2022 draft budget in order to “lower the specific taxes which weigh on the price of gas” in the event that “Gas prices would not fall to the level of what they are increasing today”, so as to “protect the purchasing power” of the French. “What matters for users is that their bill no longer increases”, insisted the Prime Minister.
Price freeze until April
Jean Castex announced Thursday “a tariff shield” with the blocking of the regulated gas tariff until April and the limitation of the increase in electricity, responding as in other European countries to the surge in energy prices . By April, through this price smoothing system, distributors will have to sell gas to consumers at a lower price than market prices. Then from the spring, it would be up to consumers to pay a little more for gas than market prices, so that the sums paid in addition during the winter by the operators are recovered.
Opposition from all sides had criticized the government for “electoral measures” until the presidential election, accusing him of “charlatanry” by this price smoothing. Several politicians had called for a reduction in VAT on gas and electricity.
Defuse the risks of a protest movement
With the amendment mentioned Tuesday, the government is trying to respond to criticism, leaving itself the possibility “to act on fiscal leverage” if necessary after April. Beyond the social issue, the executive seeks to defuse the risks of a protest movement reminiscent of the “yellow vests” of 2018. However, Emmanuel Macron intends to partly campaign, if he represents himself, by presenting as the defender of the purchasing power of the French which, despite the crisis, was generally preserved in 2020 (+ 0.4% according to INSEE).
Coming after a drop in 2020 linked to the recession caused by the pandemic, the current jump in prices affects all European countries and is explained by the very strong economic recovery, combined with low gas stocks and deliveries deemed insufficient, in particular from Russia.