France acts to bolster industry
France’s Socialist government unveiled measures to bolster the struggling industrial sector and make exporters more competitive.
Prime Minister Jean-Marc Ayrault proposed new incentives for investment in innovation, small businesses and training and tax credits for companies keeping jobs in France, as a way of easing their costs in the current downturn.
Measures included 20 billion euros in tax credits over three years, an extra 10 billion euros in public spending cuts and a 10-billion-euro increase in consumer taxes, two-thirds of which will come from the VAT sales tax from Jan. 1, 2014.
The main VAT tax will rise from 19.6% to 20% but both intermediate VAT tax rates of 5.5% and 7% will also be changed. The Prime Minister’s cabinet explained that all three VAT rates will be set into a more simple triptych: 5%, 10% and 20%.
The government also announced, in a document published before Jean-Marc Ayrault’s declaration, a new environmental tax system from 2016 of “at least 3 billion euros”.
All these measures follow a government-commissioned report submitted on Monday by industrialist Louis Gallois.
During a 30-minute press conference on Tuesday morning, Prime Minister Jean-Marc Ayrault declared that the government is following “almost all” of the recommendations contained in Louis Gallois’s report.
He finally announced that the government will present “several bills” at the beginning of 2013 to coordinate all the package’s measures.
Finance Minister Pierre Moscovici said the government spread the report’s proposals out over its five-year term to avoid a sudden jolt in consumption taxes that might hit households and stifle spending.
President Francois Hollande, criticised in opinion polls for being too timid in tackling the economic crisis, had previously said he preferred a steady path to better competitiveness to shock therapy.
With AFP & Reuters