“A justified tax cut, but timing and preparation that leave you wondering”

Pertes & profits. Is the stimulus plan already to be thrown away? Presented with great pomp in September, it had aroused interest, even enthusiasm, on the part of the actors concerned and even politicians; by its scale, 100 billion euros, and by its scope, prepare France for 2030. But the long term has been overtaken by the short term. Today, we only see flaws. And one of its main lies in one of its flagship measures, the cut in production taxes. “A political and economic fault”, exclaimed François Baroin, the president of the Association of Mayors of France (AMF), Thursday, November 19. On Wednesday November 18, it was the European Union itself which considered this measure dangerous for the budget balance of France, already very dilapidated. And, Tuesday, November 17, the highly respected Institute of Public Policy (IPP) also warned of the anachronism of such a measure in times of acute economic crisis.

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These criticisms, all relevant, touch on the three flaws of this measure. Cut out to support industry, it hardly concerns the sectors most affected by the crisis, such as tourism, catering or trade. In addition, unlike the other measures in the plan, it cuts the state budget by 10 billion euros each year, at a critical time. And, finally, it deprives of an important source of funding for local authorities already penalized by the abolition of the housing tax.

Disaster

The fact remains that the abolition of this tax is a real necessity, if we intend to preserve what remains of French industry. The very comprehensive study published Thursday, November 19, by France Strategy leaves no doubt. Analyzing French industrial policies over a long period, it combines international comparisons, macroeconomic considerations and sectoral insights. Its conclusions leave no doubt. Of all the major countries, France is the one that has deindustrialised the most profoundly. Its share in the gross domestic product (GDP) has lost 10 points since 1980, bringing it to 13.4% in 2018, against 25.5% in Germany and 19.7% in Italy. Relocations have been more massive there than elsewhere; 62% of the staff of French companies work outside France, against 38% for German companies.

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