France to consider phasing out diesel tax breaks: minister

Reuters News
Posted: Oct 04, 2015 2:59 PM

PARIS (Reuters) - France is considering raising taxes on diesel over the next five years to end an advantage over gasoline and encourage drivers to choose cleaner cars, Environment Minister Segolene Royal said.

Diesel's image has been tarnished by health warnings and in the past month by revelations that Volkswagen <VOWG_p.DE> cheated on emissions tests in the United States, putting countries like France that have promoted diesel cars in recent decades in an awkward position.

Royal, who is also responsible for transport, has in recent weeks rejected calls to ban diesel or end its tax breaks, but on Sunday backed the idea of phasing out the fuel's tax advantage.

"We need to start preparing our move out of diesel right now," she told France 5 television. "We should phase out diesel's (tax) advantage over five years."

She said that the fuel tax levied on diesel was currently 0.15 euros per liter lower than on gasoline.

Progressive increases in diesel taxes would be discussed during the debate on France's 2016 budget bill, and should be offset by tax breaks for buying cleaner-fuel vehicles, she said.

Diesel models account for more than half of the cars on French roads, although their share in new-car sales has fallen in the past three years.

The fuel has faced growing criticism since the World Health Organization in 2012 classified diesel engine exhaust as carcinogenic. City authorities have announced moves to restrict the fuel's use in vehicles in London and Paris.

The Volkswagen scandal has also undermined the traditional argument in favor of diesel that it has lower carbon emissions than gasoline.

(Reporting by Gus Trompiz and Chine Labbe; Editing by Jon Boyle)