It has recently emerged that the President of the parliamentary group Union for a Popular Movement (l’Union pour un Mouvement Populaire – UMP), Jean-François Copé, has successfully managed to defuse the ongoing conflict raging between the government and its majority on the reform of local business tax in France.
During the examination of France’s 2010 budget bill in the National Assembly, following an impromptu meeting between the UMP and French Finance Minister Christine Lagarde, Copé finally declared that an “agreement” had been reached. The UMP deputies would, Copé revealed, reject a highly contested amendment to the local business tax reform.
Recently adopted by the Finance Committee of the French National Assembly, an amendment to the country’s local business tax reform had sought to increase the amount of tax levied on small- and medium-sized enterprises (SMEs) by around EUR1bn, provoking outrage among unions.
Defended by parliamentary budget rapporteur Gilles Carrez, the amendment aimed to reduce the turnover threshold at which companies pay the new value added contribution (la cotisation complémentaire), from EUR500,000 to EUR152,500. It also aimed to impose the maximum rate of 1.5% on any company realizing an annual turnover of over EUR2m (previously EUR50m). From January 1, 2010, this value added contribution, together with a land tax on companies (une cotisation locale d’activité), will replace local business tax in France.
The SME industry body, the Confédération Générale des Petites et Moyennes Entreprises, had naturally reacted angrily to the announcement, explaining that increasing the burden on SMEs was not the way to boost growth and employment in France. Laurence Parisot, President of the employers' federation Medef, described the decision as disastrous for the economic fabric of very small companies, and small- and medium-sized companies and industries.
The professional body representing artisans, the Union Professionnelle Artisanale, had referred to the amendment as “unacceptable.”
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