We are looking for even one-tenth of a percent in growth that can get France’s economy going again. We know that trust is one of the driving forces, both for people and companies, to kick start consumption and, above all, investments.
Just after the announcement that foreign investments dropped by 77% in France—a figure that has to be carefully assessed because these statistics also take into account things other than so-called “productive” investments—the Strategic Attractiveness Committee (Conseil Stratégique de l’Attractivité) met at the Elysée Palace, resulting in a simplification of administrative formalities for foreign investors who are tempted by doing business in France. The Committee also implemented a single point of entry to welcome and guide foreigners on taxes.
However, work to restore trust, whittled away by various statements and action in recent years, is a daily affair, and it cannot be limited to sporadic announcements. Admittedly, an important step was taken with the responsibility pact and the decrease in the social charges on employment—although we are aware that this decrease will not be enough to restore French companies’ competitiveness.
So, in the tax field, our field of expertise, we have several pieces of advice for people who would like to listen, with the hope that they apply them:
- stop making people believe that tax reforms are the “be all to end all” of economic policy,
- estimate tax revenue a great deal more accurately: this will avoid being surprised, as has been the case for many years, that the budget deficit is higher than forecast,
- make tax authorities care a bit more about the economy and those participating in it: for example, abandon the much too restrictive definition of active holding companies, modernize the Dutreil pact, have bit more flexible interpretation of certain very restrictive and even harmful tax measures (business activity modification, financial assistance to companies, etc.), put an end to certain tax reassessments merely for formality’s sake (e.g., reassessments between taxable persons subject to VAT at 100%) by publishing best practices, being a true driving force for making proposals (supporting companies’ requests to eliminate or decrease the amount of certain penalties and fines that are completely out of proportion to what is at stake).
These are only a few examples and, in and of themselves, they would contribute only modestly to restoring the trust of French and foreign investors. However, compared with the big structural reforms that are necessary, but just as painful, these small steps are not complicated to take and they would attest to the will to reverse the reigning economic gloom.