Speaking at a news conference designed to relaunch his presidency thatlike France's economyhas been stuck in the doldrums, Mr. Hollande said he would tackle France's chronically high payroll taxes, addressing a long-standing demand of French business leaders.
Mr. Hollande is striving to repair relations with France's business community, which has voiced anger about climbing taxes and alarm that the euro zone's secondlargest economy is losing ground to Germany.
Since his election in May 2012, Mr. Hollande has relied largely on tax increases to fix France's finances with only marginal efforts to pare expenditures. The economy has barely grown since he took power while unemployment has risen.
Business leaders say this has hampered their efforts to compete internationally. France stands out among European peers for its relatively high labor costs, which eat into profit margins necessary to invest and recruit. For nonfinancial corporations in France, gross profit sharea standardized measure of profit marginsstood at just over 28% at the end of 2012, compared with 38% in the wider euro zone and 40% in Germany, according to Eurostat.
"How can we run a country if entrepreneurs don't hire?" he said. "And how can we redistribute if there's no wealth?"
By the end of his mandate in 2017, Mr. Hollande said, French companies will no longer be required to foot the 35-billion ($47.9-billion) annual bill for France's generous family welfare programs. He said he planned to fund the tax cut by slashing government expenditures, a departure from his previous practice of forcing consumers to bear the burden through high sales tax.
The overture to French companies risks fueling tensions within Mr. Hollande's Socialist-dominated majority in parliament and angering the country's unions. "He's turned his back on workers," the left-leaning CGT union said in a statement.
Yes, promising the moon wins elections---we've witnessed that a lot of late. But, like I said the other day, the moon is---fortunately, ironically, for the promiser's political career (and the promisees' livelihoods)---unreachable. Although, as France's president is discovering, the air can get mighty thin even as you head in that direction---particularly in a country that was half way there to begin with. Ah, but Hollande, like all politicians, is of the family Chamaeleonidae: while campaigning in 2012 he donned his socialist colors and slid his way to office. Today, he senses danger. Survival going forward means blending with the folks whose vilification was so effective on the stump. I.e., he has come to understand that the economy will break him if he doesn't break his government's stranglehold over French businesses...