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Reducing VAT on electricity, fuel oil, gas and petrol from 20% to 5.5%: this is the promise in the National Rally’s election leaflet. How much could this flagship measure cost?
At the top of the list of campaign promises of the National Rally is the reduction of VAT on electricity, fuel oil, gas and fuels. A measure whose objective is to improve the purchasing power of the French, even as the prices of these different energies continue to rise. This commitment, already made by Marine Le Pen during the 2022 presidential campaign, has been taken up again for the legislative elections. While waiting for the second round to be held, discover the estimated cost of this measure.
A shortfall for the State estimated at between 8.3 and 16.8 billion euros
Currently, VAT on energy and fuel is 20%. However, if the National Rally (RN) were to prevail in the second round of the legislative elections triggered by the dissolution of the National Assembly by Emmanuel Macron, things could change. Indeed, at the top of the far-right party’s electoral tract is a promise in favor of reducing this tax: “Reduce electricity bills and reduce VAT on gas, fuel oil and fuel”. Instead of 20%, VAT on these energies would then increase to 5.5%.
This measure was already on the National Rally’s agenda during the campaign for the 2022 presidential elections. The estimated cost of this promise was then estimated at 12 billion euros. A figure confirmed by the Montaigne Institute, which placed the shortfall for state coffers at between 8.2 billion euros at the lowest and 12.4 billion euros at the highest. For the 2024 legislative campaign, the secretary general of the RN group, Renaud Labaye, interviewed by Les Echos, again confirmed this estimated cost of 12 billion euros.
However, compared to 2022, energy prices have increased, and with them VAT-related tax revenues have also increased. The shortfall for the State could therefore be greater than that calculated in 2022. In an interview conducted by France Info, the Minister of the Economy Bruno Le Maire estimated the overall cost of such a measure at 16.8 billion euros, with, in detail, 10 billion euros for gasoline and diesel, 4.5 billion euros for electricity and 2.3 billion euros for gas.
Good to know :
When the Energy Regulatory Commission announced the increase in the price of gas, the vice-president of the RN, Sébastien Chenu, reacted by announcing that the first measure taken would be to stop “the increase in the price of gas”.
What could be the impact on the purchasing power of the French?
The reduction in VAT on energy could be implemented as early as the summer in the event of a victory by the far right in the legislative elections, thanks to a corrective budget and the modification of article 278-0 bis of the General Tax Code which lists the products and services eligible for the 5.5% VAT. In October 2021, Marine Le Pen estimated the gain for households at “340-350 euros per year”, which could limit the shortfall for the State by generating more “tax revenue thanks to the purchasing power generated” explained Renaud Labaye in 2022.
The Montaigne Institute, for its part, specified during the same period that “the cost of this measure could be reduced if the French consumed, following the reduction in taxation, more energy products”, in which case the gain for household purchasing power could be less significant than expected. Furthermore, such a measure to reduce VAT ignores issues related to the environment and energy sovereignty.
