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A Fiscal Revolution?

France’s Tax Revolt

by TOM GILL

France is in revolt over tax. In recent weeks the protagonists have ranged from drivers of heavy goods vehicles, wealthy cereal farmers, and even the equestrian lobby .  And, almost everybody in the depressed north western region of Brittany, it seems.

The narrative is that Socialist France is ‘over-taxed’. As soon as he was elected President 18 months ago, Francois Hollande came under sustained attack by the global ruling class and their tribunes in the press for promising to soak the rich with a 75% tax.

In recent weeks the anti-tax hysteria has returned with the footballers’ threatened strike against this imposition on their zillions, followed closely acts of highway sabotage and near riots in the regions over a levy on heavy goods vehicles designed to curb pollution.

The French do indeed pay a lot of tax, relatively speaking. At 44.2% of gross domestic product, France’s overall tax burden is one of the heaviest in the world, behind only Denmark and Sweden.

But these taxes are to pay for the things that make for a civilised society. Like health, education, a welfare system, decent infrastructure, an efficient bureaucracy, and protection of the environment. On most of these criteria, the country scores highly in the global league tables. But civilisation has a cost. And what the papers and TV would have us believe is the French can no longer afford it.

Clearly a major factor is the dire state of the economy, which has brought mass lay-offs, poverty and collapsing business sales. And France, chained, through the Single Currency, to an aggressively beggar-thy-neighbour Germany – Brittany’s woes are in part down to cut-throat competition from abattoirs on the other side of the Rhine that employ cheap eastern European labour – and a punishing EU-set public deficit regime, has walked into an almost permanent austerity trap.

The French government’s solution so far has been to plug the hole in the public finances primarily through taxes. The alternative to this, short of exiting European monetary union, is to kick start growth by regaining ‘competitiveness’; that is, following the route of its southern neighbours, like Greece, Spain and Portugal where workers are being forced to become more ‘flexible’, that is see their wages, welfare and other key rights slashed. Which, growing numbers believe, is ultimately the game plan of austerity, and the European project.

This week the French Government, forced into a series of humiliating retreats over its tax policy, tried to get a grip. It kicked off talks with unions and business on ‘reforming’ the system. Prime Minister Jean-Marc Ayrault has made clear, however, that there would be no over-all change in the tax burden, given commitments to Brussels over the public finances. Which begs the question, who, or more precisely, which class will pay more tax?

The tax rebellion has been led by big business and the wealthy, the same bunch who did splendidly before the global crisis in 2008, and who have been doing pretty well since it kicked in.

A colossal 100 billion euros was pocketed by fat cat shareholders of France’s largest companies in the three years to 2011 alone. And the government has already promised corporations 20 billion euros tax break.

As for the rich, despite the headlines about the 75% tax on those earning seven digits or more, it has yet to be implemented, after being shot down on a technicality, and was in any case designed to be in place for just two years. And while the government dithered, that exclusively coddled club has just got bigger, with some figures showing that last year France gained almost 300,000 more dollar millionaires, as measured by household wealth.

Workers, unable to dodge taxes like the 1%, hit by closure after closure, record 3.29 million unemployment and falling purchasing power, are not having a good crisis. Unions key gripe is with the plan to hike sales tax on 1 January, not only because it will hit their members in the pocket, but they know it will soon cost them their job as it hits consumer spending – that is French people will buy fewer French goods and services. And all, not to protect public services, but to fund the 20 billion-euro corporate welfare cheque to employers.

Last weekend, unions sought to regain the initiative from employers and the well-healed, bring out as many as 10,000 workers onto the streets of Brittany. It was impressive response to the protests a few weeks ago where, bizarrely, bosses and workers were marching together in what some fear heralded a revival of the ‘Poujadist’ anti-tax protests in France after the Second World War – or rather, when factoring in the massive protests against gay marriage earlier this year, the emergence of a Gallic version of the Tea Party.

On Sunday 1 December, another popular march is planned in Paris, led by the radical Front de Gauche, an alliance of the communists and other groups left of the Socialists. The rallying cry, as articulated by their fiery former Presidential candidate Jean Luc Melenchon, will be a ‘Fiscal Revolution’. The manifesto for the Left’s tax revolt fuses union demands- including a broader pro-jobs and growth economic strategy – with a plan aiming for a complete and genuinely progressive overhaul of the tax system – including a broad based wealth tax and a serious campaign to tackle tax evasion and avoidance – to respond to social crisis facing the country, and longer term environmental goals.

The kind of vision the President Hollande and his Socialists appeared to be presenting to the electorate as they collected the winning vote in May 2012. But seem now to have all but forgotten.

Tom Gill blogs at www.revolting-europe.com