Macron’s Retreat Shouldn’t Mean Surrender

(The Bloomberg View) -- Faced with increasingly violent protests, French President Emmanuel Macron has suspended his plan to raise fuel taxes. The climbdown is a concession to political necessity, but it shouldn’t be confused with smart policy, and it shouldn’t deflect Macron from his larger goals.

Even in a country with a fabled tradition of riotous dissent, the intensity of the protests in France has been shocking. At least three have died, hundreds have been injured, and some of the most iconic streets in Paris have been turned into battle zones. Not even the Arc de Triomphe was spared. This week protesters shut down high schools, motorways, warehouses and fuel depots across the country.

Macron’s earlier attempt to wait out the “yellow vest” protesters only enraged them more. Rather than try to negotiate a compromise (difficult, since the protesters have no leaders and no coherent goals) the government was forced to cave. But the maneuver may not work. Emboldened by the retreat, some activists now want cuts to fuel taxes already in place.

On the merits of the policy, Macron is right. Higher fuel taxes would reduce France’s carbon emissions and bring diesel taxes in line with those on gasoline. At the same time, the protesters’ anger — though not their violence — isn’t hard to understand.

For years European governments taxed diesel at lower rates than petrol, based on the false assumption that diesel is less harmful to the environment. Tax incentives work: The policy affected consumers’ choices. In France, more than 60 percent of cars run on diesel. Macron’s government now wants to phase out all fossil-fuel burning vehicles by 2040, but has failed to persuade working-class and rural citizens, who depend on their cars more than affluent Parisians, that the policy is in their interests.

Once the six-month pause just announced is over, Macron should try again. And between now and then, the government has a lot to do. Macron must explain the policy, not just impose it. And he should pledge to use the 2 billion euros generated by the new taxes to support a switch to cleaner vehicles. For instance, the government could work with automakers to raise trade-in rebates, tilting the subsidy toward low-income households. Broader tax relief for the working poor and an end to government vanity projects would also help to ease working-class discontent.

The yellow-vest revolt is the biggest crisis of Macron’s tenure, and it’s unlikely to subside soon. A tactical retreat was justified, for lack of a plausible alternative, but surrendering altogether would be a big mistake — and not just because the policy is right. That kind of defeat might cripple Macron’s reformist presidency altogether.

Editorials are written by the Bloomberg View editorial board.

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