France has been witnessing widespread protests against the proposed hike in fuel tax.
Amidst this, the French government has rolled back the planned fuel tax hike.
What is going on in France?
French President Emmanuel Macron had swept to power on a pledge of modernising the economy and restoring popular trust in politicians.
But Macron's reforms programme could be at risk of losing the momentum.
This comes in the wake of weeks of violent countrywide protests triggered by a proposed increase in the fuel tax.
Public anger against the fuel tax has escalated into a broad-based opposition to the government’s overall policies.
What is the recent decision?
Prime Minister Edouard Philippe initially said the duty hike would be deferred for six months.
But recently the government cancelled the tax proposal altogether.
It argued that a levy that was meant to induce motorists to go green was not worth the price if it undermined social cohesion.
Mr. Philippe has also suggested that the introduction of additional safety checks on cars due to take effect next year could be delayed.
How does the future look?
Welfare - The protests have shone the light on France’s tax system, its rates said to be the highest in the European Union.
It has also strengthened the demand for improvements in the standard of living.
The government is committed to increasing the minimum wage from next year.
But it could now face pressure for further concessions on social welfare.
Conversely, Paris would be constrained to demonstrate compliance with EU rules that set an annual fiscal deficit target of below 3% of GDP on member-states.
Climate - A concern linked to the withdrawal of the tax increase is the rise in France’s carbon emissions.
The roll back of fuel tax suggests that the government was retreating from its CO2 emissions reduction commitment.
Notably, Mr. Macron has fashioned himself as a champion of the green cause.
Moreover, his ability to regain lost ground will determine the prospects of warding off the populist threat in the 2019 European Parliament elections.
