The French government has announced that it is reducing tax on fuel in order to give citizens and businesses a break.

France’s petrol trades at about EUR1.70 and newly-elected President Francois Hollande has pledged to reduce the tax on it. Of course, this will have an impact on government revenue, but the theory behind it is that people will have just that little extra to spend in the private sector – whether on necessities or luxuries.

In short, reducing tax might reduce government revenue, but it will boost spending while at the same time increase the revenues of businesses – and ergo, from another source – government revenue. It might sound too simple, but that is the theory that Mr Hollande is pushing.

In Malta, unleaded petrol currently trades at EUR1.50 per litre. According to a recent Bloomberg report which studied 60 countries – Malta is the 23rd most expensive. One must also note that income in France is higher than Malta with minimum wage comparing at EUR17,000 and EUR13,000 respectively.

In a country where there is still a dearth of public transport options (no underground, no trams and hardly any water crossings), it is no surprise that people still use their cars. Arriva has improved the bus service network – but as we have said a million times – buses are not enough. They take ages to get from A to B and are still unreliable, with more and more breakdowns taking place on a daily basis.

It is with these two issues in mind that we say a fuel cut in Malta is needed. The public transport ‘overhaul’ is concrete proof that buses alone are not enough. High petrol prices are not enough to discourage people from using their cars – there are simply not enough alternatives for public transport to become more popular than one’s personal mode of transport.

But, as we have said, the price of fuel is far too high. The government will argue that Enemalta has to make up for its losses (not our fault – change the equipment and work practices) and that Malta is not that high on the fuel price list. But we reiterate – look at our wages. They are paltry in comparison to the wages of other countries that sell fuel at the same price. It is just not on.

Besides, if the government were to put some money back into people’s pockets at the time of a squeeze, they will inevitably spend it in other sectors. There is no doubt that inflation is creeping up, everyone can feel it. There is also a sentiment that government finances are not in the same position they were in last year. In other words, we seem to be slipping. Pushing petrol prices up further (or keeping them static for that matter) is not going to help the situation. We are already paying through the nose in terms of water, electricity and gas prices – the fees are exorbitant. When we look at petrol prices to boot – then it becomes even more clear that something needs to be done. We acknowledge that the government needs revenue and must balance the books in this current climate – but a more transparent and equitable way of doing it would be a much better approach.