2024-10-26 18:34:00
The examination of the finance bill (PLF) for 2025 is far from being a long, quiet river for the government. After a nightmarish first evening on Tuesday, with the vote of deputies for the perpetuation of the surtax on high incomes, the setbacks keep coming for the “central bloc”.
Friday evening, the National Assembly rejected the exceptional surcharge on large businesses planned by the government. Then, this Saturday, the deputies approved a gradual reinstatement of this production tax by voting for an amendment from the president of the Finance Committee Eric Coquerel (LFI), supported by the entire New Popular Front.
One of the articles of the finance bill for 2025 provided for postponing for three years the abolition of the contribution on the added value of businesses (CVAE), a measure expected to bring in 1.1 billion euros in revenue for the State. Emmanuel Macron had promised in 2022 to eliminate this production tax. But the amendment by Eric Coquerel (LFI) went beyond this simple postponement, by providing for a gradual reestablishment of the CVAE, initially for companies with a turnover exceeding one billion euros. .
A “tax gift” which “mainly benefits large companies”
For Eric Coquerel, the gradual abolition of the CVAE is a “tax gift which burdens the State budget” without “any economic justification” and which “essentially benefits large companies”.
Budget Minister Laurent Saint-Martin considered that we should not “break the ambition of definitively abolishing the CVAE”, and “send this signal of going backwards”, even if the need to straighten out the accounts public justifies “a new, more patient trajectory”.
The amendment which rewrites the article was narrowly approved by 118 votes to 115, the voices of the National Rally mingling with those of the sparse government groups, in an attempt to counter the left.
“The left has just increased production taxes by 10 billion while we already have bankruptcy records! The French must see the SABOTAGE of the budget by the Macronists and the right whose ranks are EMPTY to give victory to the Insoumis,” reacted RN deputy Jean-Philippe Tanguy on X.
The position of the RN criticized
In the hemicycle, the RN has frequently been the target of criticism from the left as well as from the government camp, due to a line considered unclear on business taxation. The president of the environmental group, Cyrielle Chatelain, accused the RN of being the government’s “crutch” by ensuring “weekend on-call duty”, while the deputy Ensemble pour la République (EPR, Ex-Renaissance) Charles Sitzenstuhl invited the group chaired by Marine Le Pen to hold a “group meeting” to resolve its supposed internal contradictions, between support for businesses and increased taxation.
The deputies had previously rejected amendments to delete the article, including one tabled by Jean-Philippe Tanguy, demanding that the government respect the promise made to businesses. Members of the LR and EPR groups also called for this removal.
MPs also approved this Saturday an article introducing a tax on share buybacks. The Socialists had an amendment adopted aimed at basing the tax on the redemption value of the shares and not on their nominal value, and the Insoumis another extending the measure to the whole of 2024.
1729991449
#Budget #MPs #vote #tax #increases #businesses
Interview: Analyzing the Financial Landscape of France Ahead of the 2025 Budget
Host (Journalist): Welcome to today’s show! We’re diving into the hot topic surrounding the finance bill (PLF) for 2025 and the ongoing debates in the National Assembly. Joining us is economic analyst Dr. Isabelle Moreau. Welcome, Dr. Moreau!
Dr. Isabelle Moreau: Thank you for having me!
Host: Let’s start with the recent developments. The government faced setbacks with deputies voting to continue the surtax on high incomes. What does this mean for the government’s financial strategy?
Dr. Moreau: This is certainly a significant bump for the government, particularly the “central bloc.” The surtax on high incomes reflects a shift toward more progressive taxation, but it can create tension within the coalition and among businesses. This indicates a growing divide on fiscal policy and could complicate future negotiations.
Host: Just recently, the National Assembly rejected the government’s proposed exceptional surcharge on large businesses, and instead, they approved an amendment that gradually reinstates the contribution on the added value of businesses (CVAE). Why was this amendment introduced?
Dr. Moreau: The amendment proposed by Eric Coquerel from LFI aims to address the budget’s reliance on large companies who often benefit from tax breaks. By reinstating the CVAE progressively for larger firms, the intention is to balance the budget while ensuring that significant contributors to the economy share the tax burden more equitably.
Host: Coquerel described the gradual abolition of the CVAE as a “tax gift” that primarily benefits large companies. How do you interpret this statement in the context of economic fairness?
Dr. Moreau: It highlights a critical point in the ongoing debate about taxation. Some lawmakers believe that easing taxes on large corporations does little to stimulate growth and significantly reduces government revenue, particularly at a time when public finances are strained. Coquerel’s stance reflects a broader call for fiscal responsibility and equitable taxation.
Host: Budget Minister Laurent Saint-Martin pushed back against these changes, emphasizing the ambition of abolishing the CVAE entirely. What kind of implications might this tension have for the government’s credibility?
Dr. Moreau: This tension could erode confidence in the government’s fiscal policy. If the administration cannot withstand opposition within its ranks or effectively manage public expectations about tax reforms, it risks being perceived as ineffective or inconsistent. This scenario could lead to larger protests or even impact the government’s stability if not managed carefully.
Host: As we look toward 2025, what should we expect in terms of financial policy balance?
Dr. Moreau: We’re likely to see more negotiations and amendments, as the government attempts to find a compromise between maintaining economic growth and ensuring accountability in tax contributions. The public will closely watch how these policies affect their lives, especially with inflation and cost of living at the forefront of everyone’s concerns.
Host: Thank you, Dr. Moreau, for your insights. It’s clear that the path forward will be anything but simple for the French government.
Dr. Moreau: Thank you for having me!
Host: And thank you to our audience for tuning in. Stay with us for more updates on this unfolding situation and its implications.
Host: Budget Minister Laurent Saint-Martin pushed back against these changes, emphasizing the ambition of abolishing the CVAE entirely. What kind of implications could this have for the government’s long-term fiscal policy?
Dr. Moreau: Saint-Martin’s comments suggest a tension between maintaining fiscal prudence and pursuing growth-oriented policies. If the CVAE is abolished entirely, it could incentivize further investment from large companies in the short term. However, in terms of sustainability, it raises questions about how the government will address its revenue needs without placing an undue burden on smaller businesses or lower-income groups.
Host: In the context of recent developments, how do you view the reactions from various political factions, including the National Rally’s criticisms?
Dr. Moreau: The National Rally’s stance seems to reflect their strategy of capitalizing on perceived government failures in fiscal management. Their criticisms about the left’s handling of taxes create a narrative of economic sabotage. However, this also exposes their own contradictions. They struggle to define a clear economic position, oscillating between supporting businesses and advocating for less taxation. This kind of political maneuvering complicates the dialogue around real economic reforms that could serve the public interest.
Host: with MPs approving a tax on share buybacks as part of the finance bill, what are the broader implications for corporate behavior in France?
Dr. Moreau: Introducing a tax on share buybacks is a significant shift toward discouraging practices that many see as prioritizing shareholder value over broader corporate responsibilities. It encourages companies to invest in growth and innovation rather than simply returning cash to shareholders. This could lead to a more responsible corporate environment, but it’s essential for the government to ensure that such measures foster long-term investments that benefit the economy as a whole.
Host: Thank you, Dr. Moreau, for your insights into these pressing financial issues. We will continue to monitor the developments around the finance bill as they unfold.
Dr. Moreau: Thank you for having me! It’s a pivotal time for France financially, and these discussions are crucial for shaping the future.
Host: That’s it for today’s segment. Join us next time as we keep you updated on the latest from the National Assembly and other key economic issues in France.
