Business chiefs give green light to tax hikes

The French government is to announce a deficit-reduction plan on wednesday setting out tens of billions of euros of spending cuts, and new taxes. The heads of some of France’s biggest companies say they agree on the need for more taxes.

REUTERS/ Eric Gaillard

Earlier this month French Finance Minister Francois Baroin said that the government would get rid of some tax breaks which bring in some 75 billion euros of revenue to the government and it would cut some 45 billion euros of social benefits.

The French audit court said more was needed including the reduction of at least 67 billion of social benefits and an additional 75 billion euros of unofficial tax breaks.

A leading trade union said the government is considering revising one of the policies it put in place in 2007 - the exoneration of employer taxes on overtime hours, which loses the government some 3 billion euros a year in social charges, and 1.4 billion in income tax.

The government is also looking into raising taxes on the country's highest earners, something welcomed by the leaders of several of France’s biggest companies.

The heads of 16 French companies signed an open letter on Tuesday supporting a temporary rise in their taxes to tackle the budget deficit.

They include the bosses of cosmetics company l’Oreal, advertising agency Publicis, oil giant Total, and even the Societe Generale bank, whose share prices have seen drops on the French market recently.

"We have benefitted from the French model and we are attached to the European model, which we would like to preserve", said the letter.

Parliament is due to vote on the measures on 6 September.