France's High Taxes Breed a Populist Revolt, Again

Politicians seem unable to learn from a history of grabby tax policies fueling populist anger.


Jean Baptiste Quentin/Newscom

For all of its reputation as a rule-bound society in which liberal democracy uncomfortably shares the stage with an intrusive state, France has a healthy history of grassroots revolts, too. President Emmanuel Macron probably should have remembered this before he pushed his plan to intentionally tax fuel into unaffordability.

If Macron had bothered to recall past populist eruptions against the burdensome and ravenous state, he might have avoided the street violence of recent weeks, as well as the potentially dangerous political baggage that seems to inevitably adhere to these uprisings.

The gilets jaunes—yellow vests, named after the high-visibility garments protesters donned as a symbol—were brought into the streets by the French government's environmental push as implemented through big and continuing hikes in carbon taxes. For fuel, this means a 23 percent increase in taxes just this year, hitting popular diesel especially hard, at a time when taxes already make up about 60 percent of the price.

The avowed point of the taxes, according to Macron, is not just to subsidize environmental programs, but to force people to "change habits" by making fossil fuels more expensive.

Deliberately making fuel more expensive might not be that important to the mass-transit-loving urban elites that make up the base of Macron's support, as well as that of his ruling En Marche party, but it's a punch in the gut to small-town and rural France where, as in the U.S., cars and trucks are absolutely essential to getting from place to place and making a living. It's these "sans dents" (literally "without teeth"—a term of contempt reportedly used by former Socialist president Francois Hollande to describe the common people) who flocked to the cities to protest against the tax hikes.

The protests have since turned violent and lethal, with bricks thrown, businesses and government offices torched, and tear gas deployed by police. "The protests have been so intense in the capital and other cities for two weekends in a row that tourists spoke of civil war-like conditions," Deutsche Welle reports.

The protests could have been predicted by anybody who remembers the reaction to France's fuel taxes in 2000—although the current situation is far more serious.

Delphine Goldsztejn/ZUMA Press/Newscom

Complicating matters—and making the public anger more intractable—is that the gilets jaunes seem to be truly grassroots and leaderless. Nobody really has the authority to cut deals with the government, and the few self-appointed representatives who agreed to meet with officials pulled out after threats from other protesters.

That leaves the government playing catch-up and hoping that suspending the planned fuel tax hike will be sufficient to calm the anger of people who are now adding to their tax protests a grab-bag of complaints about unrelated free-market reforms, particularly eased labor rules, in a country that desperately needs a liberalized economy.

That leaderless movement has also created an opening for existing extremist political leaders to try to step in to impose their imprint. Right-wing populist Marine Le Pen and leftist Jean-Luc Mélenchon have both encouraged the protests and called for new elections to resolve the crisis—and give themselves a shot at enhanced power.

Le Pen's role is especially unsurprising, given that her father, Jean-Marie Le Pen, got his political start during the Poujadist tax revolt of the 1950s. Then, as now, anger at grabby politicians evolved into a wider-ranging populist movement driven by resentment of presumptuous elites and their preferred policies. Led by Pierre Poujade, the movement began by ejecting tax collectors from shops and moved from there to anti-Americanism and protesting the loss of France's empire.

As a further warning to Macron and company, Poujade's movement won 52 seats in the National Assembly. The youngest of the tax rebels to gain a seat was Jean-Marie Le Pen, who went on to found the National Front. His daughter, Marine Le Pen, faced Macron in a runoff in the last presidential election.

By fanning the flames of the gilet jaunes tax revolt, Marine Le Pen is returning to her family's political roots and asserting her populist credentials. By dismissing the tax revolt, Macron is continuing the snotty French governing tradition of infuriating the public and creating long-term problems for the powers-that-be.

France needs the tax relief that the giles jaunes demand. The country "has the least competitive tax system in the OECD," according to the Tax Foundation's 2018 Tax Competitiveness Index, which cites high levies on pretty much everything. But the country also needs the free market reforms that Macron has promised and that the protesters have added to their list of grievances.

France's "complex and rigid labor laws are a major deterrent to employment growth," notes the Index of Economic Freedom, which ranks France at an unimpressive 71 and only "moderately free" in economic terms.

Both tax relief and loosened economic rules are possible, even if they seem improbable in state-centric modern France. Dirigisme—government direction of the economy—may be a very French concept, but laissez-faire is also a French term, even if it's one that has fallen out of favor in the country where it was coined.

The French can have both lower taxes and economic freedom—and perhaps a measure of peace. Or they can have neither, and lay the foundation for more strife to come. The choice is theirs to make.