It almost seems like it was only a short time ago that France’s Socialist-with-a-capital-S government was finally starting to come to grips with the fact that the tax burden they’ve taken to imposing on their citizens has been so huge as to significantly hinder their economic growth, employment, and business competitiveness, and realizing that if they ever want to get back to a robust rate of said economic growth, job creation, and productivity, they were going to need to roll ’em on back quite a ways.
Oh, wait — that was only a short time ago. As in, last month.
Which doesn’t quite help to adequately explain what the thought process was here. Via the WSJ:
The French government unveiled a 2014 budget Wednesday that continues to rely on higher taxes, threatening to further dent household spending power and economic growth, as well as President François Hollande’s record low popularity.
Faced with growing discontent over high taxation, Mr. Hollande’s government emphasized efforts in the budget to improve France’s public finances by curbing spending. But net new taxes are still set to increase by €3 billion, with households shouldering the greatest burden, including an increase in the sales tax.
The measures add to a tax burden that is already among the highest in Europe and are likely to weigh on the modest recovery in France, the eurozone’s second-largest economy, where households account for the largest component of gross domestic product. …
French companies and households have been hit hard by a steady increase in taxation since Mr. Hollande was elected 16 months ago. He introduced more than €7 billion ($9.3 billion) of fresh taxes after coming to power and another €20 billion in the 2013 budget, in a bid to restore France’s public finances and rein in its budget deficit.
Oddly enough, businesses don’t seem too thrilled this ‘new-and-improved’ addition to the country’s already historically high tax burden, via the Financial Times:
A senior lobbyist for a group of France’s biggest companies said the tax, in effect imposed on earnings before interest, tax, depreciation and amortisation, would especially hit manufacturers. For many companies it would cancel a large chunk of a €20bn tax credit being introduced by the government to lower France’s high labour costs. “It contradicts the government’s own policy of relaunching French industry,” he added.
Hollande’s grandiose ideas and predictions about spurring the economy onward and downsizing France’s ever-growing mountain of debt (all set to hit a whopping 95 percent of GDP next year) have so far mysteriously failed to bring about their promised results — and somehow, I’m skeptical this is going to be the pivot upon which he really starts to turn things around.