In an attempt to calm the growing discontent of a part of the French, the Prime Minister, Jean Castex, announced, Thursday, October 21, the payment of a “Inflation compensation” to those whose income does not exceed 2,000 euros net monthly.
Several voices in the opposition regretted that the government did not simply lower fuel taxes – TICPE or VAT – which account for most of the price at the pump. But lower taxes would cost ” very expensive “, Mr. Castex justified. In fact, explained Bercy in recent days, a reduction of 1 cent in taxes per liter of fuel would generate a shortfall of around 500 million euros for public accounts. The day after the announcement of his prime minister, Emmanuel Macron also justified this compensation rather than a reduction in taxes ” It costs a lot more. Anyone who calls for wisdom in terms of public spending would be well advised to look at what it costs. “
This “Inflation compensation” will be paid to 38 million French people at a cost of 3.8 billion euros. If such a sum had been spent on lowering gasoline taxes, the price at the pump would have fallen by 8 cents per liter, or four euros for a full 50 liters.
To get an idea, we have developed the tool below to estimate the cost at the pump and the impact on public finances based on taxation and the price of a barrel of oil.