Macron Vows to Repair ‘Deep Anger’ With Inclusive Tax Response

(Bloomberg) -- France’s President Emmanuel Macron said he heard the “deep anger” against rising costs of living that is creating tensions across the country and vowed to offer more inclusive solutions on taxes and energy sources.

The 40-year-old leader is trying to respond to a grassroots movement dubbed “Yellow Jackets” that has staged protests, sometimes violent, for the past two weeks and is threatening to grow further. The protesters first opposed a tax hike on fuel prices, then expanded their clamor against the rise of the cost of living and the government’s policies they say favor richer citizens.

In a speech on France’s 10-year energy road map presented Tuesday in Paris, the French leader said he would seek to respond both to the social and to the climate “alarms” while sticking to his plan to make France a “decarbonated economy by 2050.” The government will “adapt” future tax increase on fuel prices to the oil market moves, Macron said. Measures to make consumption less dependent on fossil fuels will also be accelerated, he said.

“The energy transition cannot be done at any cost, it can’t bring more inequalities and a two-speed France,” Macron said. “You tell us ‘you deal with the end of the world and we deal on how to make ends meet.’ We will answer both,” he said in a fifty-minute speech from the Elysee presidential palace.

Social Tensions

Yellow Jackets protesters promised Tuesday to continue their movement that has already blocked highways and fuel depots across the country. On Saturday some supporters lit fires and clashed with police on the Champs Elysees in Paris. Macron sought to quiet the anger, saying he understood and even agreed with their analysis that policies have so far been more beneficial to richer urban citizens.

In a speech that stretched from social tensions to nuclear reactors’ fate, the French leader promised to adapt his energy policies -- through the tax system and incentives for low-carbon consumption -- to French people from cities to farmland. He pledged to make additional tax cuts for citizens as soon as the economy would allow the government to do so.

The government will maintain its planned January gasoline tax increase but the measures to adapt future hikes to crude market prices will be included in the 2019 budget bill to be voted by the end of the year, according to Macron’s office.

Spiral of Misunderstandings

Calibrating a response to the protests, sticking to his plans all the while not giving in to the opposition’s use of the discontent, has proven a challenge for Macron for the past couple of weeks and is a key for his own political future.

While France’s centralized election system has given him control of both the legislature and the presidency until 2022, he won just 24 percent of the vote in last year’s first round and took over a country simmering with resentment after years of economic under-performance.

The Yellow Jackets are giving voice to that feeling.

“There’s a spiral of misunderstandings between the head of state and the French people,” political analyst Bruno Cautres said in a report for pollster BVA. "The promise of emancipation met the reality of a French society fractured by inequalities."

Cautres said Macron’s presidency is in crisis, his approval rating at 26 percent lower even than that of his hapless predecessor Francois Hollande at the same stage of his mandate.

©2018 Bloomberg L.P.