PARIS (Reuters) – France is preparing plans for a new round of tax cuts for companies to help spur economic growth and achieve full employment by 2025, Finance Minister Bruno Le Maire said on Tuesday.
High unemployment has been the scourge of successive French governments for decades although President Emmanuel Macron has made some headway in bringing it down after a series of pro-business reforms early in his five-year term.
Macron is due to present measures in the coming weeks for a new supply-side push to boost growth, a plan dubbed the productive pact as it is supposed to make life easier for companies. He will make the final call on any tax cuts.
“The productive pact has a clear objective: full employment in 2025,” Le Maire told business leaders. “All levers will be used for this end, (including) … a cut in production taxes, according to a time frame that should start in 2021.”
The French unemployment rate stood at 8.6% in the third quarter of 2019, a fraction above the 8.5% recorded in the previous three months, which was the lowest since 2008.
Production taxes are a raft of levies companies must pay in France on top of the normal corporate income tax.
The finance ministry estimates production taxes are worth a combined 77 billion euros ($86 billion) – twice the EU average and seven times more than in Germany – and French firms often complain they are a major problem for their competitiveness.
Production taxes are levied on things such as commercial and industrial property and also include a contribution to value added, a turnover tax and a myriad of secondary levies.
However, Macron may find it difficult to cut production taxes as they are an important revenue source for local and regional administrations, which are already suffering from lost revenue after the scrapping of a tax on primary residences.
($1 = 0.8951 euros)
(Reporting by Leigh Thomas; Editing by David Clarke)