French Socialists: We should probably reform this convoluted tax code of ours, huh?
posted at 5:21 pm on November 26, 2013 by Erika Johnsen
I missed this last week, but in light of France’s third-quarter return to economic contraction and the anti-tax riots breaking out all over the country, it sounds like a few of the ruling French Socialists were finally moved to definite, growth-oriented action — or at least, to paying lip service to definite, growth-oriented action.
President Francois Hollande’s regime has been marked by back-and-forths on a bunch of new, grandiose taxation schemes, but none of them have done much to accomplish the deficit reductions for which the government has been aiming, and meanwhile, the French economy is struggling under a historically high tax burden. The economy and the employment rate, as you might very well guess, have only yo-yoed around stagnation levels, and the French are getting increasingly displeased with their indecisive and ineffective president as well as their prohibitively high tax rates. Check out this bizarre protest that went down over the weekend, as Reuters reports:
Thousands of horse-lovers paraded their animals through central Paris on Sunday in a protest against a planned sales tax rise they say will put riding centers out of business and send horses to the slaughterhouse. …
Anger at taxation, unemployment stuck at 11 percent and sluggish economic growth has sent thousands of people into the streets across the country over the past two months. …
Organizers of Sunday’s protest say the EU-mandated rise of France’s VAT to 20 percent as of January 1 – from the 7 percent reduced rate paid by equestrian centers today – will shut down a fifth of centers across France.
Some 6,000 jobs will be lost, they estimate, and 80,000 horses will have to be sent to slaughter. …
A guillotine was wheeled through the streets, its blade poised above a toy horse’s head. Another horse effigy was mounted on a crucifix.
Yep — I would say their tax code does sound a little complicated, no? Ergo, via the WSJ:
Prime Minister Jean-Marc Ayrault made a new pledge Tuesday to transform France’s tax system, acknowledging broad public discontent following a series of policy U-turns.
“France’s taxation system has become too complex, almost illegible, and French people too often misunderstand its logic or think what they pay is unfair,” Mr. Ayrault said in an interview published in the business daily Les Echos. “I think the time has come for a transparent overhaul of our tax system.”
[Sidebar: Did you catch that “French people too often misunderstand the logic” of the taxation system? …How generous of him to say so.]
Mr. Ayrault told the newspaper he aims to overhaul the tax code in the 2015 budget and will soon begin meeting trade unions and business representatives to seek their input. …
Since entering office 18 months ago, President François Hollande has relied heavily on tax increases to rein in the country’s budget deficit. …
Such to-and-fros over taxes can hurt the economy because business leaders delay spending as they wait for greater clarity.
Standard & Poor’s Ratings Services, which downgraded France to double-A from double-A-plus this month, was among those warning that Mr. Hollande now has little political room for further measures to repair finances.
France’s ruling Socialists, however, have developed a habit of talking out of both sides of their mouths on taxes (…gee, imagine that), and the business community is skeptical that they are going to get either relief or certainty out of this latest tax-reform pivot. The government better do something soon, though, because France’s reputation as the “sick man of Europe” is only growing steadily worse.