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French Union Medef Seeks "Urgent" Corporate Tax Cuts

by Ulrika Lomas,, Brussels

04 December 2013

Geoffroy Roux de Bézieux, Vice President of the French employers' union Medef, has underlined the need for the Government to urgently lower the tax burden on businesses in France, within the framework of its 2015 tax reform, not to increase dividends, but, quite simply, to enable businesses to reinvest.

Given that the rate of compulsory levies in France is currently one of the highest in Europe, just behind Denmark, this has resulted in a loss of competitiveness for businesses, in less investment, and in fewer jobs, Roux de Bézieux emphasized, making clear that there is therefore an "urgent need" to lower taxation. Taxation, he declared, should be seen as a "competitiveness weapon."

Under no illusion that there will always be "winners and losers" in any tax reform, Roux de Bézieux nevertheless emphasized that if there is no reduction in the corporate tax burden, then the reform is "doomed to failure." Furthermore, he underscored the importance of maintaining what has already been implemented, namely the CICE competitiveness and employment tax credit and the capital gains reform. Medef has stressed to the Government that these measures must remain in place, he added.

Pointing out that the envisaged overhaul of taxation must take place over time, Roux de Bézieux urged the Government to take the time to reflect and to consult with the country's economic stakeholders, so that by the end of its five-year term in office, entrepreneurs in France will boast that they are once again able to reinvest, to recruit, and to grow. This is what we need, he reiterated.

Stating that France has a social contribution problem, and therefore a problem as regards the cost of labor and competitiveness, in particular in the "exposed" sectors of the economy, Roux de Bézieux called on the Government to lower public spending as a first priority, before subsequently lowering the country's general social contribution (CSG) and value-added tax (VAT). These should be "moderate" tax cuts, to avoid a shock, he maintained, noting that Medef is proposing a 1 percent reduction every year for three years.

French Prime Minister Jean-Marc Ayrault has begun holding a first round of talks with the country's social partners. The Government has already met with unions and with employers' organizations, and is currently in discussions with cross-party members of parliament.

The Government's "ambitious" reform of taxation is designed to ensure that the French tax system is simpler and more understandable for the taxpayer in the future. The first proposed fiscal measures are due to be provided for within the framework of the 2015 finance bill.

TAGS: tax | investment | business | value added tax (VAT) | Denmark | entrepreneurs | corporation tax | France | dividends | tax reform | European Union (EU) | Europe | Tax

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