Paris: A government-commissioned report will urge France to cut €30 billion (Dh144 billion or $39.09 billion) in payroll taxes over two to three years to increase the country’s competitiveness, newspaper Le Figaro said on its website on Friday citing unnamed sources.
The lost revenue would have to be covered by massive cuts in public spending — far beyond the €10 billion savings envisaged in the 2013 budget — as well as rises in VAT and the CSG levy that helps to fund France’s social security system, the newspaper said.
The report by Louis Gallois, former chief of aerospace group EADS, will say the sharp reduction in labour costs would give a necessary jolt to France’s economy, according to Le Figaro.
French business leaders have long called for a decrease in payroll taxes, which rank amongst the highest in the world.
Gallois’ report on French competitiveness, which was commissioned by Hollande, is due out on November 5.
Sources told the newspaper the report would call for labour costs to be lowered over the next two to three years — with €20 billion coming off charges paid by employers and 10 billion off those paid in by employees.
The cuts would only apply to wages up to 3.5 times the minimum wage, currently set at €9.4 euros an hour before tax, or €1,425.67 euros a month, the website said.
Hollande’s government is due to set out measures early next year to boost the competitiveness of an ailing economy where unemployment has risen to its highest in 13 years and growth has remained stuck at zero for the past three quarters.
