June 3, 2019 / 7:38 AM / 2 months ago

France rules out electricity tax cut, to review prices in 2020

PARIS, June 3 (Reuters) - The French government ruled out lowering value added tax on electricity prices but will review the calculation method for state-controlled utility EDF’s regulated tariffs next year, the environment minister said on Monday.

Regulated power prices rose 5.9 percent this month - the sharpest increase in years - after the government had blocked the rise for months in order to appease the “yellow vest” protest movement against the high cost of living.

The government plans to review the power price calculation so that power bills more closely reflect the relatively low cost of EDF’s nuclear production and are less driven by wholesale market prices.

Asked whether the government could lower value-added taxes on electricity to compensate for higher prices, environment minister Francois de Rugy said that cutting VAT on power from 20 to 5.5 percent would cost the state some 1.5 to 2 billion euros.

“If we have to lower taxes each time prices increase because production costs go up or wholesale price increase, we will never get out of trouble. This is government income. We have already lowered taxes on housing and labour. We cannot lower taxes all around,” he said on BFM television. (Reporting by Geert De Clercq; editing by Richard Lough)

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