French PM To Reassure Mayors On Local Tax Reform

by Ulrika Lomas, Tax-News.com, Brussels

19 November 2009

French mayors are attending a congress meeting in Paris to debate the highly controversial reform of local authorities and the equally contentious abolition of local business tax in France.

Given that local business tax (la taxe professionnelle) is currently the main source of income for French local authorities, the proposed reform has provoked uproar in France, with mayors expressing their deep concerns about future resources.

Prime Minister François Fillon is due to officially open the congress meeting, which is certainly a high-risk strategy for the government in view of the palpable tensions surrounding the proposed reforms.

Although French President Nicolas Sarkozy had been invited to attend the meeting, he declined the offer, preferring instead to invite a group of 700 mayors to hold a debate at the Élysée palace after the close of the meeting.

Sarkozy’s decision nevertheless provoked fierce criticism from the Socialist Party, calling for the President to “come and explain” the proposed reforms before congress.

Jacques Pélissard, President of the French Mayors Association (l’Association des maires de France – AMF), welcomed the President’s decision, however, stating that a separate meeting will allow for improved dialogue. The AMF is in a strong position, Pélissard added, given that the French senate is due to debate the reform of local business tax shortly, and will therefore be able to draw on the work of the mayors.

A number of French ministers, including Brice Hortefeux (Interior), Christine Lagarde (Finance), Eric Woerth (Budget), and Alain Marleix (local authorities), are also due to attend the congress meeting in a bid to defend the government’s reform and to convince those present of the merits of both projects.

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