French Senators Rebel Against Local Business Tax Reform

by Ulrika Lomas, Tax-News.com, Brussels

04 November 2009

In yet another display of unashamed defiance, and once again with impeccable timing, senators from France’s parliamentary majority party, the Union for a Popular Movement (UMP), have risen up in protest against the government’s plans to reform local business tax.

As the French Senate prepares to examine the text, former Prime Minister Jean-Pierre Raffarin and his band of 24 insurgents have threatened to reject the government’s proposal in its current form, warning that the plans put local authority finances at risk.

The latest wave of attacks follows recent criticism expressed publicly by two other former French Prime Ministers, Alain Juppé and Edouard Balladur.

Highly critical of the government’s proposed timeframe for reform, the senators are outraged that reform of French local authorities is due to take place after the changes to the country’s local business tax, before key details have been ironed out.

In a bid to pacify the growing number of rebels, French Finance Minister Christine Lagarde is shortly to hold talks with the group of “dissident” senators.

Determined to relieve the burden on French businesses, however, Budget Minister Eric Woerth has remained adamant that reform of local business tax will take place as planned, and within the 2010 budget.

Adopted recently by the French National Assembly, following a long standoff between the government and its UMP majority, the text proposes the abolition of the tax levied on business investments from January 1, 2010.

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