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Hollande Calls On Businesses To Solve France's Woes

by Ulrika Lomas, Tax-News.com, Brussels

03 January 2014


Conceding that France's high tax regime is suffocating the nation's economic prospects, French President François Hollande, in his New Year's address, has committed to lowering the tax burden on businesses that create jobs.

Speaking on January 1, 2014, Hollande committed to deploy new revenues to introduce tax breaks for businesses. With Hollande's popularity at a record low, he reassured French taxpayers that his Government would this year tackle rising unemployment, abuse of the welfare system, and minimize government expenditure.

Without announcing concrete proposals, Hollande discussed brokering a "responsibility pact" with the nation's businesses, involving a trade-off of "lower labor charges and fewer restrictions on [French firms'] activities in return for hiring more workers and engaging in more dialogue with trade unions." The lower tax burden is expected to take the form of lower social security contributions, which presently add around 33 percent to local hiring costs, cramping France's international competitiveness.

Previously-announced hikes to the nation's value-added tax rates became effective on January 1, 2014, raising the 19.6 percent headline rate to 20 percent, and the intermediate rate to ten percent from seven. After receiving approval from the nation's highest court, the Constitutional Council, in late December, the Government is expected to soon push ahead with plans to slap a 75 percent personal income tax rate on the country's highest paid, two-thirds of which would be shouldered by companies.

TAGS: court | VAT rates | tax | business | public sector | unemployment | tax rates | social security | France | tax breaks | trade | individual income tax | Europe

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