Determined to stimulate the economy and protect vulnerable businesses in turbulent times, French President Nicolas Sarkozy has set out two bold initiatives designed to kick-start investment and industrial development with immediate effect.
The key measures detailed in the proposals include exonerating firms from local business tax on fresh investments and creating a strategic investment fund, both intended to shelter small businesses and prevent the threat of a takeover by multinationals.
President Sarkozy has confirmed that the local business tax or “taxe professionnelle” will not be levied on business investments between October 23, 2008 and December 31, 2009, saving businesses an estimated EUR1bn over the course of a full year. He has also offered his reassurance to the local authorities that the resulting shortfall will be met by the state.
Aware of the pressing need to reform the highly controversial tax, the government is eagerly awaiting the imminent findings from the Balladur commission, charged with reviewing the structure of local authorities, before deciding on the best course of action.
Unveiling the second initiative, the setting up of a strategic investment fund, Sarkozy emphasised his commitment to encouraging the provision of capital for SMEs, vital to their survival given the current climate.
The French President had already urged his EU counterparts to establish a European wealth fund. However, owing to a decided reticence demonstrated by certain countries, Germany included, he resolved to press ahead with the French fund.
Under the joint supervision of the National Assembly and parliament, the fund will be managed by the Caisse des Dépôts et Consignations, a publicly owned savings bank at the heart of the state’s financial operations in the economy.
The recent announcements come in the wake of a series of rescue packages drawn up to tackle the on-going financial crisis, including a EUR360bn investment in public guarantees to prevent the risk of bank collapse, measures to support housing and other initiatives to assist small businesses.
Despite acknowledging the inevitable rise in deficits, Prime Minister François Fillon confirmed his backing for the measures, imperative, he believed, in order to support the economy, help businesses and bolster buying power. Any increases in taxes or new charges were ruled out.
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