Why are people in France so annoyed at a fuel tax? Short answer: because it's about way more than the fuel tax. Most analyses of the Yellow Vest movement have done a poor job explaining this, but I recommend these three excellent articles:
1. Sylvain Cypel on the New York Review of Books blog:
"Taxation has often been the primary catalyst for social revolt in the history of modern France, and this time is no exception—although, in this case, its significance is far more ambiguous. As Gérard Noiriel, the esteemed historian of French social struggle, has noted, this rejection of the fuel tax has united two dissimilar groups: those who “reject the tax” in a general sense and those who specifically “reject the injustice of the tax.” What made this coalition possible was both Macron’s actions and his way of imposing them, which has shaped public opinion dramatically. On the one hand, in 2017 he abolished the “wealth tax” known as the ISF, which was levied on only the top 0.9 percent of French society, and even lowered taxes on France’s richest companies and richest individuals. On the other hand, he has rejected every increase, no matter how small, of the minimum wage, and he has practically frozen retirement benefits (nearly half of retirees live on less than €1200 per month, or $1,360, and one quarter of those on less than €800, or about $900), as well as social security benefits. At protests and road blockades, these two themes—frozen wages and diminished retirement benefits—have recurred again and again.
Macron seems to be reaping what he has sown. He coasted to electoral victory thanks to the breakdown of the institutions that had mediated the people’s relationship with government. The first collapse had been that of the traditional political parties of left and right; after thirty-five years of nearly continuous economic crisis, they still hadn’t found a long-lasting solution. The crisis had been most evident in the unemployment rate, which had held steady between 8 percent and 11 percent for three decades, while income inequality had only worsened....
“At the same time”—a favorite phrase of Macron’s—what’s happening in France is inevitably linked to a growing phenomenon across Europe: the rise of movements that discount both institutions—the European Union as much as national governments—and the social and economic policies that have been in force for the last few decades. This phenomenon is already visible in Germany and Austria, Scandinavia and the Netherlands, Italy and the United Kingdom, and is intertwined with the advent of political parties in the former Eastern Bloc that are championing authoritarian democracies. But there is a fundamental difference between the Yellow Vests and these European populist parties: the near-total lack of identitarian or xenophobic slogans in the new French movement. There are no placards calling for a “France for Frenchmen,” no cries against an “Islamic invasion” at their protests. Given that Marine Le Pen’s Rassemblement National (formerly the Front National) appears to be the most heavily represented political party within the purportedly apolitical Yellow Vests, there have been surprisingly few cases of racist statements against immigrants.
At this point, the concessions Macron’s government has granted to placate the Yellow Vests’ demands—a six-month moratorium on fuel-tax hikes, followed by its outright cancellation—seem too little, too late. “Doesn’t anybody up there get that we’re all on anxiety meds because we’re that miserable?” asked one protester. “We’re not asking for the moon, we just want to have decent lives.” The overwhelming majority of the Yellow Vests want, at a minimum, to bolster their purchasing power, to improve low wages, and increase retirement pensions and unemployment benefits."
2. Thomas Piketty on his Le Monde blog:
"The crisis of the ‘yellow vests’ raises a key issue both in France and in Europe, namely that of fiscal justice. Since his election, Emmanuel Macron has spent considerable time in explaining to the country that the « premiers de cordée », i.e. the leading fortunes and industrialists, should be treated with care; the top priority was to grant tax cuts to the wealthiest, and as a start, the wealth tax abolished. All this was done at top speed, in a spirit of invincibility and without the slightest qualm of conscience. Even Nicolas Sarkozy had been wiser in 2007 with his ‘tax shield’ which he did nevertheless have to cancel in 2012. Inevitably all those who do not consider themselves to be ‘leading lights’ have felt abandoned and humiliated by the Macron discourse, and this is how we now find ourselves in the present situation. The current leadership has committed a series of factual, historical and political errors which it is urgent and possible to correct today.
In the first instance, Macron attempted to justify the abolition of the wealth tax by stating that this tax was instrumental in wealth leaving France. The problem is that this statement is totally unfounded from a factual point of view. Since 1990 we have witnessed a spectacular and continuous rise in the number of estates and amounts of wealth declared to the wealth tax. This development has taken place in all bands of the wealth tax, in particular in the highest bands, where the number and amount of financial assets has risen even faster than the holdings in real estate, which in turn have risen more rapidly than the GDP and the total payroll. The falls in the stock exchange in 2001 and 2008 meant a temporary calm in this evolution but, as soon as the crises ended, the long-term trends picked up again....
The government’s second mistake is historical: they are in the wrong time-period. It is undeniable that the United States and the United Kingdom launched a process of dismantling fiscal progressivity in the 1980s and that this movement was partly followed in Europe in the 1990s and at the beginning of the years 2000 – for example with the suspension of the wealth tax in Germany and Sweden (and as a bonus that of the inheritance tax in the latter case).
But are we really so sure that these policies produced the effects expected? Since the crisis in 2008, and even more so since Trump, Brexit and the explosion of the xenophobe vote all over Europe, there is a better appreciation of the dangers posed by the rise in inequality and the sense of abandonment in the working classes, so that many now understand the need for a new social regulation of capitalism. In these conditions, adding a further measure in favour of the richest in 2018 was not really very clever. If Macron wants to be the president of the 2020s and not the 1990s, he is going to have to adapt quickly."
3. Francesco Saraceno on his blog, Sparse Thoughts of a Gloomy European Economist:
"Will Macron’s announcement appease the uprising that inflames France? Most probably not, because they suffer from an original sin, a contradiction that the President is unwilling (or incapable) of seeing. The yellow vest protest originates from the gas price increase, that affected rural households and farmers in particular? But the malaise has much deeper roots, that are widespread. The French economy feels, after ten years, the full weight of a crisis that has hit very hard the middle and lower classes: Unemployment that fell too slowly (costing re-election to François Hollande ; austerity that, although less marked than in the peripheral eurozone countries, has reduced the perimeter and coverage of public services and of the welfare system, while increasing the tax burden; and, finally, the reduction of family allocations and welfare in general, which particularly affected the most disadvantaged categories. All of this led to what Julia Cagé, on French daily Le Monde, called “the purchasing power crisis”, that simmered for a long time, before exploding in the past weeks.
Emmanuel Macron has an enormous responsibility for the bursting of the crisis. True, the increase in the tax burden for the middle class is mainly due to François Hollande (under the impulse of an ambitious undersecretary, and then minister of the economy, named … Emmanuel Macron). One might even argue that the budget law for 2019 reverses the trend as that the reduction of some taxes (in particular the elimination of the housing tax for the majority of households, and the flat tax on capital income) has more than offset the reduction in social benefits.
What explains then the fact that the discontent emerges, so violently, just now? The explanation is simple: it is to be found in the approach that the French President pursued since he beginning of his mandate. Like Donald Trump, with whom he disagrees on almost everything, Emmanuel Macron believes in the so-called “trickle down” theory: shifting the tax burden away from the rich is the best strategy to revive growth, because these people are more productive than the average, and invest the extra income in innovative activities. The fruits of higher growth would then percolate to everyone, even those who were initially penalized by the tax reform. From the beginning of his mandate, Macron’s choice to give France a pro-business image was clear, leading to a drastic reduction of taxes on the richest, and making the taxation, for the upper part of the distribution, fundamentally regressive.....
The problem is, as an increasing body of evidence shows, that trickle down does not work. Favoring the richest does not increase productive investment (it rather tends to boost non-produced asset prices and unproductive consumption), and the impact on growth is both negligible and not shared; these days’ demonstrations stand to prove it. History cannot be rewritten, but the attempt to twist the tax system in favor of the ecological transition would probably have been met with much more enthusiasm, in a country like France where environmental awareness is high, where it not accompanied by the sentiment of increasing social injustice that Macron’s economic policies have deepened."
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