Trou­bling times for Macron

Pres­i­dent likely to face more protests de­spite back­ing down over tax rise

The New Zealand Herald - - World - Sylvie Corbet

French Pres­i­dent Em­manuel Macron has scrapped a fuel tax rise amid fears of new vi­o­lence, after weeks of na­tion­wide protests and the worst ri­ot­ing in Paris in decades.

Protesters yes­ter­day cel­e­brated the vic­tory, but some said Macron's sur­ren­der came too late and is no longer enough to quell the mount­ing anger at the Pres­i­dent, whom they con­sider out of touch with the prob­lems of or­di­nary peo­ple.

Macron has vowed to cut taxes and boost France’s growth. A year and a half after he came to power, he is fac­ing mul­ti­ple chal­lenges.

A coun­try’s eco­nomic in­di­ca­tors don’t al­ways match the pub­lic’s per­cep­tion of how their coun­try is do­ing, but do help un­der­stand the pop­u­lar anger.

Here is a look at the taxes that have be­come cen­tral to the “yel­low vest” protesters’ claims.

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 Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and Devel­op­ment. The French Gov­ern­ment’s tax rev­enues last year reached 46.2 per cent of an­nual GDP.

Prime Min­is­ter Edouard 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 health­care 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 specif­i­cally about 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 gov­ern­ment plans to wean France off fos­sil fu­els via small but reg­u­lar tax in­creases.

Taxes rep­re­sent about 60 per cent of the price of fuel in France.

The next tax in­crease was due to start on Jan­uary 1. But in the face of the some­times vi­o­lent protests, Macron de­cided yes­ter­day 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 protests, Macron’s Gov­ern­ment notes it has ac­tu­ally cut taxes for French peo­ple. How­ever, they will mostly ben­e­fit mid­dle-class peo­ple 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, ac­cord­ing to the statis­tics agency In­see. This year, a small in­crease of 0.6 per cent is ex­pected, largely thanks to the tax cuts. Yet the fig­ure is an av­er­age that hides dis­par­i­ties across so­ci­ety.

Macron’s first re­forms, like a cut to taxes on wealth, largely ben­e­fited the well-off, and this is cited fre­quently by protesters.

Wealth tax

The de­ci­sion to slash a spe­cial tax on house­holds with as­sets above €1.3 mil­lion ($2.15m) 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 per cent of France’s rich­est peo­ple due to the wealth tax cut.

It says the poor­est 20 per cent of house­holds will see their real in­comes fall be­cause prices for goods such as en­ergy are ris­ing.

Photo / AP

Em­manuel Macron yes­ter­day scrapped a fuel tax rise amid fears of new vi­o­lence.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.