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French Government’s New Tax on Highway Concessions and Large Airports: A Step Towards Ecological Transition

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By: Mahnoor Jehangir
French Government’s New Tax on Highway Concessions and Large Airports: A Step Towards Ecological Transition

Aiming at Polluting Infrastructures

The French government is set to introduce a new tax on highway concessions and large airports, expected to yield around 600 million euros annually from 2024. This tax targets long-distance transport infrastructures, such as roads and air travel, which are seen as major contributors to pollution. The underlying principle of this move is to ensure that the entities causing more pollution contribute more towards the necessary investments needed for an ecological transition.

No Impact on Users, Claims the Government

Bruno Le Maire, the Minister of the Economy and Finance, has guaranteed that this tax increase will not impact the users due to the maintenance of toll tariffs. Highway companies are prohibited from passing on the increase to tolls. The tax will be applicable to companies that meet a certain threshold of turnover and profitability. Previously, the government had hinted at taxing highway concessionaires like Vinci, Sanef, or Eiffage, considering their excessive profitability. However, the State Council cautioned against the legal risk of singling out companies in this sector.

Contradicting Views from Highway Companies and Airport Managers

Pierre Coppey, the President of Vinci Autoroutes, disagreed with the government’s assurance, stating that a tax increase invariably leads to a rise in toll tariffs. Vinci argued that increasing taxation would violate the state’s word and contradict the urgent need to invest in decarbonising the road.

On the other hand, the ADP group, which manages the Parisian platforms of Roissy, Orly, and Le Bourget, anticipates passing on some of the tax to airlines. According to the group, a 4.6% tax applicable to the group’s turnover is planned by the government. In 2024, this tax would cost 90 million euros, and the ADP group expects to pass on 75% of the cost to airlines in landing charges. To minimise the impact, ADP plans to stagger the increase over two to three years, adhering to the principle of a “moderate” evolution of tariffs from one year to the next. The first increase, covering nearly half of the tax impact, would occur in the 2024 tariff period.

Possibility of Legal Challenge and Future Developments

As of now, concessionaires are not considering the possibility of legally challenging this new tax. However, a few weeks ago, some entities like Eiffage had warned that they could do so. The current caution is due to this being a draft finance law that will be discussed and voted on in parliament. Highway companies and airport managers intend to educate about this tax, aiming to convince parliamentarians to push for modifications. They will reassess once the final measure is known. Therefore, this topic is likely to remain in the news for a long time.

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