The concession was one of several made by prime minister Edouard Philippe in a rare televised address, after the country was rocked by intense street clashes and vandalism in Paris over the weekend.
“This anger, you would have to be deaf and blind not to see it, nor hear it,” Philippe said after more than a fortnight of demonstrations by so-called “yellow vest” protesters.
“No tax merits putting the unity of the nation in danger,” he added.
Increases in regulated electricity and gas prices will also be frozen during the winter, while stricter vehicle emission controls set to take effect from 1 January will be suspended for six months, he said.
“The French people who have put on yellow vests love their country, they want lower taxes and for their work to pay: That’s also what we want,” Philippe said.
Pressure has been mounting after protests degenerated into the worst street clashes in central Paris in decades, leading to scores of injuries and arrests.
The concessions, coming after an earlier 500-million-euro (570 million-dollar) relief package for poorer households, mark the first time president Emmanuel Macron has had to give ground in the face of public opposition.
It was a blow for the former investment banker who has styled himself as a determined economic reformer.
Mass street protests have repeatedly forced previous French presidents into U-turns, something that Macron had vowed to avoid in his quest to “transform” the French economy and state.
But it was unclear if the measures would assuage the anger on French streets.
“The French don’t want crumbs, they want the whole baguette,” Benjamin Cauchy, one of the movement’s organisers, told AFP earlier Monday when asked about the suspension of fuel taxes.
Far-right leader Marine Le Pen, a vocal supporter of the movement, said on Twitter that protesters wanted the fuel tax hike cancelled, not just suspended.
Rescinding the increase was the main demand of the demonstrators, alongside a higher minimum wage and the return of a wealth tax on high-earners which was abolished last year.
Philippe said Tuesday that France’s minimum wage was already set to increase three percent from January, “one of the biggest increases in the past 25 years.”
But the government is eager to avoid another day of running riots and burning cars, with some people already calling for fresh protests Saturday.
“If there is another day of protests, it must be declared in advance and must take place calmly,” Philippe said.
- Macron silent -
The “yellow vest” movement, named after the high-visibility jackets worn by supporters, emerged on social media in October after months of swelling anger over rising fuel prices.
It quickly grew into wider protests against rising costs of living, especially among rural and small-town voters who accuse Macron of representing a Parisian elite with little understanding of their monthly struggle to make ends meet.
Macron has not spoken publicly about Saturday’s destruction in Paris since his return from a G20 summit in Argentina on Sunday.
But he postponed a planned visit to Belgrade due to the “problems” at home, his Serbian counterpart president Aleksandar Vucic announced on Monday.
A 40-year-old centrist, Macron was elected in May 2017 on a pro-business platform that included measures to incite companies to invest to create jobs.
Immediately after coming to power, he pushed through tax cuts for entrepreneurs and high-earners.
Those measures stirred anger among the “yellow vests” who have blocked highways and fuel depots around the country over the past two weeks.
The protests have spread to around a hundred schools nationwide, which were still partially or totally blocked Tuesday by teenagers voicing frustration over university entrance reforms.
- Truckers count losses -
Four people have been killed during the protests, including an 80-year-old woman who died in hospital on Sunday after being hit by a tear gas canister in Marseille.
The unrest degenerated into arson and looting around the Champs-Elysees avenue and other tourist attractions on Saturday, leading to shocking images that were broadcast round the world.
Police said 412 people were arrested in the capital on Saturday. Paris Mayor Anne Hidalgo said that more than 200 burned-out cars had been removed from the streets.
She also said damage to bus stops, benches and other street furniture alone on Saturday was estimated at three to four million euros.