Firms welcome €20bn tax break

Plans for a ‘competitivity tax credit’ are worthwhile - though a social charges cut may have been preferable, bosses say

7 November 2012
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BUSINESS chiefs have welcomed plans to give them a €20billion tax break to help competitivity.

The head of bosses’ representatives Medef, Laurence Parisot, said: “We have been listened to. The government is really doing something about the cost of employing people.”

The tax break plan is “worthwhile” and will benefit “both businesses that are doing well and those making losses,” she said.

However she said she was a “little disappointed” about the amount of the tax credit and the period involved and will also be looking to see if it is put into place in a way that is “simple and functional”.

In a report on making businesses more competitive, businessman Louis Gallois had recommended a €30bn reduction of employers’ social contributions over one to two years and a €10bn reduction for employees.

Instead Prime Minister Ayrault has opted for a €20bn tax credit, spread over three years, to be calculated in proportion to the total wage bill of salaries of less than 2.5 times the minimum wage.

The GFI, representing industry, called the measure a “realistic first step” and also welcomed some of the other measures announced, such as better enforcement of payment periods and the creation of a €500million fund to help struggling small businesses.

However, it criticised the ceiling of 2.5 times the Smic on salaries giving rise to the tax break, as opposed to a more “realistic” 3.5, which was mentioned in the Gallois report in connection with his suggested social contributions cuts.

Small businesses body CGPME said it regretted that the social contributions cut was dropped. “We don’t feel completely satisfied,” said its leader, Jean-Eudes Mesnil. “There was an opportunity to stop funding social security entirely through work, which has been missed.”

He also said he feared the new “competitivity tax credit” would be complicated and would be less likely to result in a “real reduction in the cost of employing people”.

Photo: Medef

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