The Atlanta Journal-Constitution
Why are the French protesting?
French President Emmanuel Macron has vowed to cut taxes and boost France’s growth. A year and a half after he came into power, he is facing violent protests over rising taxes, a high cost of living and policies some say favor the rich. A country’s economi
Tax burden
One of the French protesters’ big complaints is that they are heavily taxed.
Official statistics support that claim. France was the most heavily taxed of the world’s rich countries in 2017, according to the Organization for Economic Cooperation and Development. The French government’s tax revenues last year reached 46.2 percent of annual GDP.
Prime Mini ster Edou ard Philippe acknowledges that taxes “have steadily risen” since 2000 and that Macron’s government wants to reverse that trend.
In particular, social security expenses — which pay for the generous health care system and pensions — are higher in France than other wealthy countries. As a result, France’s poverty rate is also lower than in most European countries.
Overall, taxes are expected to decrease this year after Macron’s administration agreed on cuts. The protesters, however, complain specific ally ab out a tax on fuel that Macron wanted to increase.
Fuel tax
Approved in 2014, under Macron’s predecessor, Francois Hollande, this tax is part of gov- ernment plans to wean France offff fossil fuels via small but regular tax increases.
Taxes represent about 60 percent of the price of fuel in France.
The next tax increase was due to start Jan 1. But in the face of the sometimes violent protests, Macron decided Wednesday to scrap the tax rise next year.
Protesters say the fuel tax hurts people in rural areas who rely on vehicles for work and transportation compared with wealthier city dwellers who rely more on public transportation.
Middle-class gains
In response to the government protests, Macron’s notes itt has actually cut taxes for French people. However, hey will mostly benefit middle class peo- ple with jobs, according to the Institute of Public Policies, a watchdog. This year’s tax cuts focus on businesses, payroll and housing. The government is trying to raise awareness of its efforts: every employee salary slip must now have a line — written in large letters — detailing how much extra money the worker received thanks to the tax cuts.
While most employees benefit from the tax cuts, almost all French retirees are worse off. Macron has said pensioners must make “a small effort” to help workers.
Purchasing power
Many French protesters say they can’t pay their bills due to the higher cost of living.
Consumers’ purchasing power in France fell sharply after the 2008 global financial crisis. But since 2014 it has been growing again, aaccording to the statistics agency Insee. This year, a small increase of 0.6 percent is expected, largely thanks to the tax cuts .
Yet thee figure is an average that hides disparities across society.
Macroon’s first reforms, like a cut to taxes on wealth, largely benefited the well-off, and this is cited frequently by protesters.
Weal lth tax
The decision to slash a special tax on household with assets above 1.3 million euros ($1.5 mil- lion) was meant to attract foreign investors. Macron, however, was quickly labelled by critics as the “president of the rich.”
Government spokesman Benjamin Griveaux lamented that the wealthy often decided to invest outside France because of taxes. “We want the money to come back,” he said.
The Institute of Public Policies says French budget measures for years 2018-2019 overwhelmingly benefit the 1 percent of France’s richest people due to the wealth tax cut.
It says the poorest 20 percent of households will see their real incomes fall because prices for goods like energy are rising.