Overtime tax cuts are thrown out

MPs vote to bury key Sarkozy measure which they say stopped firms hiring extra staff

18 July 2012

A KEY measure of Nicolas Sarkozy's presidency - the exemption of tax and social charges on overtime pay - has been buried by the government in a vote following two days of ferocious debate in the National Assembly.

Sarkozy called it the right to "work more and earn more" but Prime Minister Jean-Marc Ayrault called it an "anti-employment" measure: "When an overtime hour costs less than a regular hour who believes that an employeer has an incentive to hire?"

The move, which affects all companies with more than 20 employees, comes into effect at the start of August for tax and the start of September for social charges. Budget Minister Jérôme Cahuzac rejected calls for it to be made retroactive from January 1, although this would have brought in an extra €500million.

Costing €4.5billion last year, it benefited around nine million workers and was attacked by both unions and the Cour des Comptes.

Former UMP minister Xavier Bertrand attacked the change saying that a farmworker would be €200 a month worse off under the measure.

The change is part of the supplementary budget for 2012 aimed at raising €7.2bn to start to cut the public deficit by 4.5% this year. MPs today start debates on plans for the "exceptional tax" on France's wealthiest people.
Photo: jmayrault

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