New French Socialism Causes 'State of Emergency' for Business
The protest, entitled “State of Emergency for Business”, warns that the confiscatory 62.2% tax rates in 2013 will cause grievous and lasting damage to the French economy.
The current 34.5% rate is already significantly higher than the 21% rate in Spain, 26.4% rate in Germany and 28% rate in the UK.
Mrs. Laurence Parisot, head of the MEDEF, stated that the policies border on economic illiteracy: “The idea of aligning taxes on capital with those on wages is a profound economic error. It is scandalous that the French have been left in such economic ignorance for years.”
The “State of Emergency for Business” goes on to say that the threat has risen from “a storm warning to a hurricane warning”, adding that the Socialist government of François Hollande has yet to understand the “extreme gravity” of the crisis.
As a result of the oppressive tax rate from the Socialist government, French businesses face an extra 10 billion euros, or $13 billion, of business costs from the budget unveiled in September.
Hollande is attempting to tighten fiscal policy by 2% of DGP next year to meet EU targets, but has been unwilling to significantly reduce spending or use a balanced approach.
A full 67% of the rebalanced portion of Hollande's budget comes from higher taxes.
Mr Hollande has promised reforms to the labor market next year but MEDEF remains justifiably skeptical. Even if reforms are enacted, it may be too late to prevent economic disaster.
As Mrs. Parisot describes it: “The pace of bankruptcies has accelerated over the summer. We are seeing a general loss of confidence by investors. Large foreign investors are shunning France altogether. It’s becoming really dramatic.”+11
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