“This is a message of confidence in the country that we want to convey.” Manuel Valls was surrounded by no less than seven ministers, Wednesday morning for its ads to boost investment. A communication operation over the whole of its economic policy conducted drum beating through a press conference held in the winter salon of the Élysée.
It must be said that the issue was not thin. First he had to convince his own majority to continue to support its line without question the competitiveness Employment Tax Credit (CICE) and the pact of responsibility and their 41 billion tax cut and loads from 2014 to 2017. Then he had to go look for some tenths of a still missing growth point to recovery lead to lower unemployment and allow Francois Hollande and the majority have a chance of being re-elected in 2017.
“An economic policy, it is not the zigzag”
“I wish that we stay the course. An economic policy, not zigzag “insisted Manuel Valls said in a speech after the Council of Ministers, as if he still had to convince some of his government and even Hollande, under pressure from the left of the PS and Martine Aubry who wish to redirect some of the money for companies to households.
To better swallow his pro-business policy, the Prime Minister tougher stance towards employers to fit the famous “counterparties” to the liability pact promised there is more than one year “I say again. in this field, the account is not there, the effort is not enough in too many professional branches The time is coming when the government and Parliament will have to take stock for the next stages of the pact before the summer, and it is essential that the momentum really ramping up by then. ” A thinly veiled threat not to vote expenses and tax reductions planned in 2016 and 2017 when insufficient efforts of enterprises, while only 50% of employees would be covered by a sector agreement between the social partners depending on the score of the executive.
New Tax gift for
companies
Can the government provided to his threat? “The reductions commitments will be honored,” repeats to anyone who will hear the Finance Minister Michel Sapin, which continues to insist on the “cap, consistency, continuity” of its economic policy.
In addition to the round of effects, the only true measure of magnitude stimulus actually consists of “a drop of additional tax for enterprises that invest.” This tax reduction for companies (IS) take the form of an “exceptional additional depreciation.” Clearly, this means that the company may deduct an additional 40% of the cost of the investment (for example, a machine purchased) from the tax. This amounts to a tax reduction of 13% of the total value of the investment spread over the entire life of the equipment for a body subject to the standard rate of tax (40% of 33%). “It is not aid in cash, contrary to what could say this morning an employer representative,” insisted Michel Sapin
READ our article “Investment:. Employers pouts “
No additional deficit
The measure actually is more important than would have believed leaks the last days. Remains at the fund not to increase the deficit. Because the total cost should still reach 2.5 billion euros on success. For 2015, € 380 million shortfall anticipated will be offset by savings in the new state budget. It is much less clear for 2016 and 2017, years in which the cost should nevertheless increase to 500 million euros, while France is under pressure from the European Commission to reduce its deficit more than expected. “There are tax cuts on planned societies, and it is in this context that the announced measures will be funded,” evaded Michel Sapin, raising fears that the measure comes to amputate the announced reduction of tax corporate responsibility pact.
The other detailed measures are more anecdotal, such as increased 2 billion (8 billion) of public bank’s lending capacity investment by 2017 through a portion European investment plan of Jean-Claude Juncker.
Lean measures to maintain public investment
As for the revival of public investment, it remains embryonic, budget constraint forces. The decline 11 billion of state allocations to local authorities is maintained despite the revolt of local elected officials. To appease the government has just appointed a group of experts to consider the best way to preserve their investments, which account for 60% of public investment. Decisions should be taken as early as mid-May, the Prime Minister promised. Lack of money to spend directly, Manuel Valls setting money motorway concession that should launch a plan of 3.2 billion work without obtaining as many toll rate increase in 2015.
But regardless, finally, the actual effect of scoops battery announced. The important thing for the government “to boost short-term activity,” as recognized by the Minister of Economy, Emmanuel Macron. Because only a 1.5% growth will likely reduce unemployment and alleviate the slingers of the majority. The bet is far from won. For now, the annual growth rate is stuck at 1.1%, despite the recovery.
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