Businesses Express Outrage Over French Tax Plan Targeting Long-Distance Transport Infrastructure

29 Sep, 2023

Businesses Express Outrage Over French Tax Plan Targeting Long-Distance Transport Infrastructure

An increasing number of French corporations are voicing their opposition to proposed taxation plans targeting long-distance transport infrastructure, such as airports and highways. This move comes as President Emmanuel Macron's government aims to promote rail travel over air or automobile transportation whenever possible.

During its weekly meeting on Wednesday, the Council of Ministers adopted a draft bill that seeks to impose a 4.6% levy on the revenue generated by companies operating long-distance transport infrastructure within France. To become effective next year, the bill must be presented to the National Assembly, France's lower house of parliament, by early October, where lawmakers will review and vote on its passage into law.

Air France and Transavia are expected to be the airlines most significantly affected by this measure. An Air France spokesperson expressed concern, stating that the proposed tax could hinder their ability to return to profitability. They emphasized that the tax would create unfair competition between French carriers and foreign airlines like Ryanair, which operates from airports such as Beauvais and would not be subject to this taxation.

While Air France-KLM supports the government's goal of accelerating economic decarbonization, they stress the importance of maintaining a level playing field to preserve the competitiveness of the French airline industry.

Vinci, a company responsible for operating various airports and highways, expressed its intention to exhaust all available legal avenues to challenge the proposed law. They estimated that had the tax been in place in 2022, it would have amounted to a charge of 260 million euros ($273.1 million).

Vinci takes issue with the draft law, considering it in opposition to the terms of concession contracts, particularly those entered into between the state and motorway concession companies. The company is determined to pursue all available legal remedies.

Aeroports de Paris anticipated that their earnings before interest, taxes, depreciation, and amortization would have suffered a reduction of approximately EUR100 million if the tax had been applied in the previous year. The airport operator stated its intention to implement higher tariffs next year to offset roughly half of the tax's impact, should the bill be enacted into law.

Eiffage, a civil engineering company responsible for operating several highways, estimated that the tax would have led to an operating profit decline of approximately EUR117 million in the previous year. They pledged to utilize all appropriate means and legal avenues to assert their rights on behalf of their shareholders.