Last Thursday (5 February) President Nicolas Sarkozy of France defended his handling of the economic crisis in France in a televised interview. He announced a pledge to scrap the French local business tax (taxe professionnelle) in 2010 in a bid to 'keep French firms competitive'.
The taxe professionnelle is a type of local business tax collected by departmental and regional councils in France. It is used to pay for local services, including Chambers of Commerce. Although the tax has no exact equivalent elsewhere in Europe, in the UK it can best be compared to non-domestic rates and is paid by all businesses whether or not they are subject to corporation tax. The tax has two bases: the rented value of property on the one hand, and equipment and movable assets, dedicated to production, on the other.
For some time a working party has been considering reform of the taxe professionnelle as a result of the disproportionate burden falling on certain sectors, particularly manufacturing. However, French local government is said to derive 45% of its income from the tax and often sees this as a guarantee of some independence from Paris. Many commentators suggest that without the taxe professionnelle, domestic rates in France are likely to be much higher. Medef, the Employers' Federation in France has welcomed the move, whilst the association of mayors and local councillors have called for immediate negotiations with the government to urgently redress the resulting shortfall for local authorities. President Sarkozy has evoked carbon tax as one possible solution in meeting this.
The taxe professionnelle is a type of local business tax collected by departmental and regional councils in France. It is used to pay for local services, including Chambers of Commerce. Although the tax has no exact equivalent elsewhere in Europe, in the UK it can best be compared to non-domestic rates and is paid by all businesses whether or not they are subject to corporation tax. The tax has two bases: the rented value of property on the one hand, and equipment and movable assets, dedicated to production, on the other.
For some time a working party has been considering reform of the taxe professionnelle as a result of the disproportionate burden falling on certain sectors, particularly manufacturing. However, French local government is said to derive 45% of its income from the tax and often sees this as a guarantee of some independence from Paris. Many commentators suggest that without the taxe professionnelle, domestic rates in France are likely to be much higher. Medef, the Employers' Federation in France has welcomed the move, whilst the association of mayors and local councillors have called for immediate negotiations with the government to urgently redress the resulting shortfall for local authorities. President Sarkozy has evoked carbon tax as one possible solution in meeting this.
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