France has finally fractured between its metropolitan areas and a low-wage periphery. What started as a tax revolt has become a diffuse and unstructured uprising. Many of the movement’s demands would only perpetuate France’s centralism, yet its appearance shows that this political model may no longer be sustainable.
In a nutshell
- Government doubletalk about energy taxes spurred France’s Yellow Vest tax revolt
- The movement then morphed into a popular uprising against an arrogant ruling caste
- Ironically, demands for more entitlements may only feed the overcentralized state
Violent scenes on the streets of Paris and other places in France have caught international attention. After weeks of protests and blockades to stop tax hikes on gasoline and especially diesel fuel, the Yellow Vest movement finally got the government to backtrack. First, on December 4, by suspending the proposed carbon tax for six months, then for all of 2019. Less than a week later, on December 10, President Emmanuel Macron announced a list of new measures designed to appease the protesters on national television.
While hooligans were certainly present at many street protests, most Yellow Vests were peaceful -– many even guarded the tomb of the unknown soldier beneath the Arc de Triomphe in Paris at the height of violence on December 1. The movement is diffuse and heterogeneous, its ranks made up of impoverished workers, the unemployed and retired people, but also of left- and right-wing euroskeptics and anti-globalists. Its unstructured nature means that many of the Yellow Vests’ demands are fuzzy and conflicting. What began as a tax revolt has become a symptom of a profound crisis in democracy – or perhaps a sign that France no longer has a serious democracy at all.
For many years, French politicians had praised the benefits of diesel engines in helping curb carbon dioxide emissions. Completely neglecting the serious health threat posed by fine particles in diesel exhaust, government policies supported diesel-powered vehicles to protect the climate. Even Mr. Macron was a diesel advocate in 2016, when he was economy minister. But in 2017 and 2018, the consumption tax on diesel fuel was raised sharply, bringing it in line with the rate set for gasoline.
The French public was not prepared for this sudden about-face. After years of being told the opposite, they were now informed that diesel is bad for the planet and needed to be taxed, while the electric car (which is not in fact all that eco-friendly) is the new environmentally safe auto. Since even ordinary French voters know that only a tiny fraction of “green” tax revenue goes to protect the environment, they naturally believed this was just another false pretext to replenish the state budget – and help the government keep its fiscal commitments to the European Union.
Facts & figures
Macron backs down
Promised concessions to Yellow Vests in President Emmanuel Macron’s Dec. 10 speech:
- Government-funded pay increase of 100 euros/month for minimum-wage earners
- Abolishing income tax and social security contributions from overtime pay
- Cancellation of planned increase in social security taxes on retirement pensions in 2019 (for those earning less than 2,000 euros a month)
- Appeal to private employers to make voluntary year-end bonus payments to low-wage earners
- Steps to reduce tax avoidance for high-income individuals and companies in France
According to government estimates, implementing these measures will cost from 8 to 10 billion euros. Without savings elsewhere, the additional public spending could widen the general government budget deficit to 3.5 percent of GDP – well above the 3 percent limit set by the EU’s Stability and Growth Pact
There was good reason for voters to be cynical. Over the past year, the government has used a variety of “good Samaritan” pretexts to raise money. Reduced speed limits, more radars and increased fines, ostensibly to improve road safety; a higher excise on tobacco; increased fees for compulsory motor vehicle inspections; higher prices and taxes on natural gas, electricity and mutual insurance companies. The tax hike on motor fuels was the last straw.
While President Macron talked about the need to avoid an “end-of-the-world” scenario before emitting a lot of CO2 himself by jetting off in his personal plane to the G20 summit in Argentina, many Yellow Vests took the opportunity to remind him of their own “end-of-the-month” problem. The fact is that many French families, particularly in rural areas and small towns, have trouble making ends meet. Thanks to its heavy reliance on nuclear power, France also happens to be one of the lowest carbon-emitting developed countries on the planet.
This resentment and sense of unfair treatment was exacerbated by perceptions that France has become split between prosperous metropolitan areas with large, subsidized public transportation systems and a forgotten periphery of small towns and rural areas – where transport options are few and diesel is the least expensive way to fuel the family car. The sense of grievance simmering in rural France was deepened by the government decision to tax their only available means of transportation to support the richer, supposedly “eco-friendly” residents of big cities – who have taxpayer-funded mass transit systems at their disposal.
Given France’s heavy fiscal burden, the emergence of an anti-tax movement is more than logical.
In some regions, the Yellow Vests asked shopkeepers to start a VAT strike – in other words, not to add value-added tax to customers’ bills. In other places, they spread manure in front of tax offices or bricked up the entrance doors. Popular anger at the tax system was by no means unfounded. On December 5, the Organisation for Economic Co-operation and Development (OECD) published comparative figures showing that France’s tax burden (46.2 percent of gross domestic product in 2017) was the highest among its members – ahead of even Denmark and Sweden.
Considering this context, the emergence of an anti-tax movement in France is more than logical. Many Yellow Vests have demanded that the number of parliamentary deputies be reduced and that the Senate, or upper house, be eliminated altogether. They also want an end to unspecified state “handouts” to various groups. Several observers saw in these calls an opportunity for the birth in France of an American-style Tea Party, with quasi-libertarian leanings.
…to populist revolt
Yet hopes that the Yellow Vests would go liberal were soon disappointed. Their “register of grievances” quickly moved from lower taxes and “sound management of public spending,” as one representative said in a television interview, to demands that logically required more public spending and higher taxes (if not on themselves today, then on somebody else tomorrow).
This list includes stronger social safety nets and higher minimum wages (which many small business owners in the movement probably do not support), a cap on monthly salaries at 15,000 euros, a ban on business offshoring, increased public services and reintroduction of a special surtax on the rich. In a sense, then, many of the Yellow Vests do not want to change the system but simply to turn it in their favor, at the expense of others.
Their demands are often mutually exclusive, especially higher public spending and lower taxes. France does not just have the highest tax burden in the OECD; it also leads in public spending, at 57 percent of GDP. Many points seem borrowed from Marine Le Pen’s hard-right National Rally or from Jean-Luc Melenchon’s far-left France Insoumise (FI). Put together in this way, the Yellow Vests’ “register of grievances” resembles nothing so much as a Christmas list to Santa.
Even so, the movement appears to have retained its independence and its wariness of traditional politicians. This applies of course to President Macron, who despite his campaign promises and his success in forcing much of the older generation of politicians into retirement, has not revolutionized any of the traditional traits of France’s ruling class.
The disconnect was evident when Mr. Macron kept harping about “staying on course” and created a new High Council for Climate (duplicating other public entities already serving this purpose). Even as he did so, reports surfaced about plans to spend several hundred thousand euros on redecorating the Elysee Palace. Interior Minister Christophe Castaner swooped down in a costly, exhaust-belching government helicopter to meet with Yellow Vest protesters, while one ruling party lawmaker admitted in an interview that she had no idea what the minimum wage was. At best, such displays of obliviousness show a ruling elite that is seriously out of touch; at worst, they are viewed by many citizens as pure arrogance.
This estrangement is why the Yellow Vest movement has refused to adopt a formal structure or to affiliate with any political party or trade union. In the early days, the boycott of existing political organizations was total, because these people – like much of the French public – no longer trust traditional representative channels. Even Yellow Vest “representatives” are forbidden to negotiate off-camera, which caused the cancellation of a meeting with the prime minister.
Such incidents reveal a profound crisis of representation in France, as shown by the clear split between the political system’s top and bottom. Like the Arab Spring, political mobilization was made possible by the social media. The institutions of traditional politics proved useless.
The Yellow Vest crisis is another symptom of French democracy’s dysfunction. Its political, administrative and social model has made the country impossible to reform.
The logical conclusion drawn from the movement’s early anti-tax grievances is to seek clear reductions in public spending. Better fiscal management can be achieved by seeking consensus on national spending priorities. This would involve a radical rethinking of the “French way.” But these early grievances were soon submerged in a welter of contradictory demands. If the ruling class wanted to keep their “cake,” why should ordinary people not get theirs, too? The unspoken divide-and-rule policy of French republicanism thus arrived at its logical conclusion: division.
Despite regular elections, the French people for many years have been deprived of democratic government.
Examples abound of the schizophrenic mindset underlying the protests and French attitudes toward government in general. One Yellow Vest representative who denounced high taxes was found to have drawn a generous civil service salary for more than a decade without doing any actual work. However, none of this should distract from the popular frustration at stagnating incomes, reduced purchasing power and even poverty in many places – the result of years of sluggish economic growth. France finds it hard to compete globally and achieve prosperity with public spending, taxation and debt all at unsustainable levels – precisely because of its dysfunctional democracy.
Despite regular elections, the French people for many years have been deprived of a genuine democratic government. The reasons for this state of affairs are many. First, the country’s political caste is not accountable enough. Second, the full toolkit of fiscal illusion has been used: from debt to a plethora of hidden taxes and redistribution schemes between various levels of the “layer-cake” administrative system.
This shell-game has shielded public representatives from responsibility (making it easier for them to overspend to buy votes) and infantilized voters by obscuring the connection between taxing and spending. It is symptomatic that the crisis erupted over a few-cent increase in gas-pump prices, when the total tax bill on fuels can amount to 150 percent (of which only the 20 percent VAT charge is visible on the receipt). True democracies are not in the business of hiding things from their citizens. Technocracies are.
France’s lack of democracy also stems from a social model that is centralized and corporatist. The state “manages” various social interests by negotiation and the granting of special privileges. This model is inherently conservative, as no one wants to risk losing their entitlements (droits acquis) by changing the system. The whole administrative edifice is based on spending “other people’s money.”
Reforming such a system is very difficult, even though it generates chronic overspending, irresponsibility and mistrust (through the toxic competition for favors). Yet the French are still not able to face up to these facts and discuss them openly. Without such an honest debate, the preconditions for democratic reform – and for democracy itself – do not exist.