This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

France To Give Businesses $25 Billion Tax Break

France has largely sidestepped the massive budget cuts and reforms undertaken by its neighbors, despite having one of the world's highest proportions of state spending. Unions and companies are currently in discussions to overhaul the labor market - but the issues are so touchy in France that it's unclear how far they'll go.

Gallois warned in his report that the biggest problem in France is that because of high labor costs, companies have to slash prices in order to compete. Without high profit margins, companies have very little to invest in product innovation and quality. Ayrault promised that the pact would give companies more room to maneuver and address this problem.

The government's plan focuses on small businesses, often the motors of innovation and employment. It calls for small businesses to receive special help to compete internationally, and billions of euros in a new public investment bank will be reserved for smaller companies.

The government also promised to reduce red tape and to limit changes to its tax and other policies over the next five years. France has a very complex tax code - a major thorn in the side of companies, especially small ones that spend tremendous resources to figure out what they owe.

Half of the money will come from spending cuts between 2014 and 2015. However, Ayrault did not detail what would be cut. The rest will come from new taxes, including a hike to most sales taxes - apart from basics like food which will benefit from a cut - in 2014.

The new measure follows a similar plan by former President Nicolas Sarkozy to lower the tax burden on companies via a blanket increase in sales tax. At the time, the Socialists campaigned against the plan and one of their first moves in office was to scrap it. The new government's plan is similar, but lowers the sales tax on basic necessities, a move the Socialists hope will ensure the poorest people aren't unduly burdened.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs