(just kidding, France is so screwed)
From the Telegraph:
French president François Hollande has bowed to massive pressure for business tax cuts to pull France’s economy out of slump and stave off industrial decline, ditching a core element of his socialist platform.
Company taxes will fall by €20bn a year equal to 1pc of GDP, to be phased in gradually by 2015 under a convoluted system of rebates.
Premier Jean-Marc Ayrault said it amounted to a 6pc cut in unit labour costs, enough to close the gap with eurozone rivals. "France is not condemned to a spiral of decline, but we need a national jolt to regain control of our destiny," he said.
The mid-rate of VAT for restaurants and services will jump from 7pc to 10pc. The top rate will rise slightly to 20pc. Spending cuts will plug the revenue gap in order to meet the EU’s 3pc deficit target.Critics call it the most humiliating U-turn in French politics since François Mitterrand abandoned his disastrous experiment of "Socialism in one country" under a D-Mark currency peg in 1983.
Mr Hollande came to office vowing lower VAT rates to protect the buying power of workers, and called business tax cuts a "gift to the rich". He imposed €10bn of fresh taxes on firms just weeks ago in his 2013 budget, a move that set off a revolt by business leaders.
The French National Assembly was in uproar on Tuesday as Gaulliste deputies derided the volte-face as a confession of misrule for the past six months.
His plan comes a day after French industrialist Louis Gallois delivered a report calling for "shock therapy" to halt the relentless decline of France’s eurozone export share, and the loss of 60,000 industrial jobs each year. He recommended deep cuts in payroll levies to bridge the gap in labour costs with Germany.
"President Hollande is finally starting to back away from some of his economically dangerous campaign promises," said Christian Schulz from Berenberg Bank....MORE
