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France's Hollande Urged To Clarify Corporate Tax Cuts

20 January 2014   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas (Tax-News.com)

While welcoming French President François Hollande's announcement of plans to lower the fiscal burden on companies in France, within the framework of a "responsibility pact," Pierre Gattaz, President of French employers' federation Medef, has nevertheless demanded clarification as to the precise scale of the envisaged tax cuts.

During a recent press conference, President Hollande unveiled details of the pact, and revealed plans to abolish employers' family welfare contributions by 2017, effectively lowering the fiscal burden on businesses to the tune of around EUR30bn (USD40.8bn). President Hollande inferred, however, that this measure would be financed in part via the "transformation" or reallocation of the CICE tax credit for competitiveness and employment.

Given that the CICE tax credit equates to tax relief of EUR20bn, the potential "gain" for employers from the family welfare contribution cut would therefore be minimal, only EUR10bn, Gattaz pointed out, visibly unimpressed. This requires further explanation, he made clear.

Furthermore, if the Government still intends to "converge" the French and German tax systems, as President Hollande also indicated in his speech, it would actually need to reduce the "gap" between the tax burden on companies in France and those in Germany by at least EUR100bn, Gattaz insisted. Eurostat figures suggest that the difference in the tax burden between the two countries currently stands at EUR116bn, he pointed out.

Underscoring the need to bridge this tax divide, Gattaz questioned how this would be achieved.

In his address, President Hollande pledged to implement EUR50bn in expenditure cuts between 2015 and 2017, to enable the Government to in turn further lower compulsory levies and reduce the cost of labor for corporations, beyond the EUR30bn already agreed. Urgent clarification on the proposed scale of the structural reforms and the magnitude of the additional tax cuts is needed, Gattaz emphasized.

President Hollande is due to officially present the responsibility pact on January 21.

This article first appreared on tax-news.com.


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