However, diesel cars pollute far more than the traditional gasoline cars and so the government is considering imposing high tax on diesel cars to deter people from buying them.
Mr Jospin, whose government last week proposed the biggest raft of tax cuts for many years, had already offered to cut the tax on diesel fuel by 15%.
China has also raised taxes on gasoline and diesel and reduced the sales tax on more fuel-efficient vehicles.
It qualifies for lower car tax (unlike a diesel) and is also exempt from the London congestion charge.
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In 2001, for example, he signed bills that raised the sales tax on fireworks and even signed an air pollution tax on the purchase or rental of diesel equipment.
He insisted on replacing income tax with a new 1% financial-transactions tax, and on freezing the price of diesel oil, a useful revenue-earner.
He said also that SUV sales in India are unlikely to be hurt by the tax increase because of the lower price of diesel.
This was largely used to pay for a cut in expected revenue from petrol and diesel prices, as he pulled back on forecourt fuel tax levels.
But he said that the government would need to control expenses, especially on subsidies such as diesel and fertilizers - mainly non-urea, and expand the tax base to generate more revenue to be able to meet fiscal objectives over the long run.
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In Virginia, GOP Gov. Bob McDonnell recently won approval for overhauling his state's highway maintenance system by raising diesel and retail sales taxes and creating a mechanism for a potential future gasoline tax hike.
But here again, California is king of the tax guzzlers, with an average charge of 84.3 cents per gallon on diesel.
Monday, addressing an industry event, Mr. Chidambaram said the increase in excise tax on SUVs was a way for the government to recover revenue losses due to selling diesel at subsidized prices.
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