France

Manuel Valls delivers policy statement


Published

The new Prime Minister, Manuel Valls delivered his policy statement to the National Assembly yesterday and in the vote of confidence that followed, he obtained 306 votes out of 571 potential votes.

The Prime Minister talked about a Broad Pact providing support for business and employees, reaffirming a goal of growth and return to employment. Mr. Valls acknowledged that France had lost its economic strength over the past ten years and said that “Producing in France, creating wealth in France, creating sustainable jobs in France” in order to “roll back mass unemployment,” through the Covenant of Responsibility announced on 14th January by the President was his key aim.

“First, there is the cost of labour. It must fall. This is one of the levers of competitiveness that weighs heavy” said the prime minister. He went on to say that there must be a “Zero burden on the employer of an employee paid at the minimum wage”.

The Prime Minister then delivered a number of policy initiatives as follows:

From 1 January 2015, the employer of an employee who is paid the minimum wage will not pay more employer contributions to URSAFF. “This is a revolution,” said the Prime Minister.

For salaries up to 3.5 times the minimum wage, more than 90% of employees, family contributions will be lowered by 1.8 to 1 January 2016, or 4.5 billion euros of additional relief.

Companies will benefit from tax cuts through two taxes:

1. C3S, called the social solidarity contribution of companies, paid by 300,000 companies, will be phased out by 2017. This will be about €6 billion of additional margins, including €1 billion in 2015.

2. The tax on the income of companies for its part will be progressively reduced with the removal in 2016 of the surtax in the previous five year period. The normal rate of this tax will reach 28% in 2020, with an intermediate step in 2017.

Another measure to be introduced will be the removal of “dozens of small, complex taxes and low performance” in order to simplify the tax system.

The government will add €5 billion by 2017 to improve the purchasing power of the poorest households. To achieve this, the Government intends to act on two levers:

“As of 1 January 2015, the decline in employee contributions for employee’s minimum wage will increase the net salary. According to the Prime Minister, this measure will “provide €500 per year in additional net wage.

The Prime Minister also called for a relief of the tax burden on low-income households and in particular “those who entered the field of income tax in recent years even though their situation was not improved.”

“Public debt is €30,000 for each French person”, said Manuel Valls. “In 2012, the public deficit was 5.2% of GDP. It was reduced to 4.3% in 2013. The Prime Minister said that further recovery of public accounts “throughout the five-year period” would continue and he confirmed the objective of reducing by €50 billion in public spending from 2015 to 2017, ensuring that “the effort will be shared by all.”

The prime minister said that “The state and its agencies will take the largest share, €19 billion; €10 billion will come from health insurance; an additional €10 billion of local cuts and €11 billion of other social spending. The rest will come from greater justice, a coherence and legibility of our benefits system”, said Manuel Valls.

The Prime Minister said today the euro is “10% more expensive than the summer of 2012, which obviously weighs on our exports.”

Manuel Valls also stressed the importance of putting the European Union on the path of growth through major investment policies and employment policies, particularly directed towards youth.

The Prime Minister proposed four further changes:

1. Halve the number of regions in France. Regions may decide to merge by concurrent deliberations. In the absence of proposals after the departmental and regional elections of March 2015, the Government will provide by law a new map of the regions to be established by 1st January 2017.

2. A new inter-map based on the living areas will come into force on 1st January 2018.

3. Clarification of powers . The Prime Minister proposed deleting the clause of general jurisdiction. Thus, the powers of the regions and departments will be specific and exclusive.

4. Engage the debate on the future of county councils. Manuel Valls proposes their deletion by 2021.

“The recovery of the school must be pursued” said the Prime Minister, “the development of school timetables is a good reform because with it many more children have access to highly complementary extracurricular activities, sports, cultural education given by teachers. ”

Manuel Valls confirmed the government’s priority for more housing saying. “To produce more housing, cheaper, faster, must be simpler,” he said, explaining that 50 measures to simplify existing rules and standards will be taken without compromising on quality and performance, and orders will be published before the summer.

He explained that the energy transition will be one of his priorities. It “reduces our trade deficit and strengthens our sovereignty, gives purchasing power and encourages extremely promising sectors in terms of jobs,” he said.

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