France

Iron man pledges more taxes


Published

President Nicolas Sarkozy, in a televised debate last night, pledged more taxes just three months away from the French presidential election.

The move was clearly designed as part of his iron man image building to show that he will take tough decisions on behalf of the French people even if they are unpopular. The TV interview, broadcast by multiple channels nationwide came on the back of an ‘off the record’ discussion with journalists last week when Sarkozy admitted that he had made mistakes and that he would retire from politics if he lost the election.

Commentators widely reported that this was part of his pre-election softening up of the electorate to show that he is really a nice person, with last night’s interview showing that he would sacrifice himself for the French people.

Whether it will work is another matter. Opinion polls are showing that the Socialist candidate, François Hollande, is increasing his lead with predictions that he will take 56% in a second round runoff to Sarkozy’s 44%.

The key pledges made last night are:

• VAT (consumption tax) to rise by 1.6% to 21.2% in October. This will pay for a cut in payroll charges to social security currently paid for by employers. It is hoped that the move will make French industry more competitive. Opinion polls suggest that the move is unpopular with the French people
• A 0.1% tax on financial transactions (the so called Robin Hood tax). This should raise around €1.3 billion (£10.8bn; $17bn), but has been opposed by a number of other European leaders, especially Britain with its large financial market in the city. Going it alone could be dangerous for France but the tax won’t be introduced until August, well after the election
• A 2% increase in tax on financial profits
• A rise in the number of apprenticeships for young people
• Increased construction of low cost housing
• A new ‘industry’ bank which will provide cheaper loans to small and medium sized businesses.

In the interview the president also said that the 2011 public deficit would be better than the 5.7% forecast, coming in at around 5.3% or 5.4%. Obviously the move was designed to show that the tough austerity measure were working.

The president had an additional present for his 57th birthday on Saturday when the German Chancellor, Angela Merkel, said that she would be campaigning for him in the presidential election.

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