French Businesses React To Sarkozy's Investment Tax Plans

by Ulrika Lomas, for LawAndTax-News.com, Brussels

29 August 2008

The French business community has criticised plans recently announced by French President Nicolas Sarkozy to introduce a new investment tax which would help fund a jobseeker scheme.

Mr Sarkozy on Thursday announced his proposal for a 1.1% tax on revenue from real estate and other investments, such as dividends, a levy which will be known as 'active solidarity revenue' (RSA). The tax is expected to raise EUR1.4bn and will fund a major part of the social programme, in a bid to help the unemployed get back to work.

This new levy would be paid in addition to existing investment taxes, the paper reported.

Under the current system, some unemployed people are reluctant to take jobs because they fear they will be less well off than on benefits.

Sarkozy's plan would provide additional money to those prepared to take low paid jobs.

However, there has been a wave of objection from the business community, with the leader of French business lobby Medef, Laurence Parisot, remarking, according to Dow Jones Newswires, that:

"You can't just increase taxes - or add new ones - every time you need to fulfill a new objective. If we add up everything that has been decided by the government in recent times, there's ground to get worried."

According to a France 24 report, meanwhile, Alain Tourenne, the Socialist chairman of a French regional authority that has piloted the RSA, observed that wealthier taxpayers will escape the new levy thanks to an income tax cap introduced by the President last summer.

Defending the planned levy, Mr Sarkozy reportedly stated that:

"This reform will be one of the most important of my term in office."

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