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the Court of Auditors wonders about its tax advantage

In 2021, fuel prices soared, with an increase of almost 20% for unleaded 95 E10 and diesel. But there are alternatives to reduce your fuel budget, starting with E85. On average, it costs € 0.70 per liter. The E10 is 1.58 €!

If E85 is much cheaper, it is because it benefits from a sacred tax advantage: the TICPE, the main tax on fuels, is much lower: 11.83 € per hectolitre, against 66.29 € for the E10 and € 68.29 for the classic 95. Added to this is a lower VAT, since there is (magic of France) a VAT on TICPE. However, it should be noted that E85 leads to an increase in consumption, the motorist therefore goes to the pump more often.

In a report devoted to biofuels published at the end of December, the Court of Auditors wonders, however, about this advantageous tax treatment. She recalls that European regulations do allow a reduction in taxation “to take into account the additional production costs caused by the incorporation of renewable energy in the form of biofuels”. But the Court seems to have doubts about the proportionality between the decrease in TICPE and the increase in production costs.

The problem is that the production cost gap between fossil fuels and biofuels is very difficult to know, because there are a lot of trade secrets. The Court indicates that the administration “was not able either to provide elements of appreciation on the conditions under which the reduced tariffs of TICPE were determined in favor of biofuels”, which it considers “more open to criticism “because these are data that could have enabled Parliament” to comment on the differences in TICPE tariffs on the basis of rational decision criteria “.

The Court then looked at the exchange prices of fuels to estimate a possible difference in production prices, before taxes. For example, in 2018, the classic SP95 and the SP 95 E10 were sold at the same gross price, € 0.55 excl. But there was a small gap at the pump, the TICPEs were not the same. For the Court it is therefore “an incentive measure financed by the State for the benefit of the consumer and not a measure to compensate for the additional cost of ethanol production”.

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The Court even points out that ethanol cost around € 0.50 excluding tax. She therefore sees no additional cost compared to SP 95 and the enormous help for E85 would be unjustified! Hence its recommendation to take better account of these additional production costs in granting tax advantages in order to remain in order with European law.

The government responded to the report. In his response, Agriculture Minister Julien Denormandie stresses that manufacturers do not communicate on production costs and reaffirms his support for E85, “an economic and ecological alternative”. But he recalls that discussions are currently being conducted at European level to better tax products with regard to their real energy performance and independently of additional production costs.

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