EU: IMF warns over-taxed France risks slipping behind Italy and Spain

The Telegraph ^ | 11/5/2012 | Ambrose Evans-Pritchard

[bruinbirdman]

The International Monetary Fund has told France to take urgent measures to head off national economic decline, warning that the country risks being left behind as southern Europe embraces reform.

François Hollande

Throwing the guantlet at the feet of the Socialist president Francois Hollande, the IMF said rising tax rates are undermining France as a place "to work and invest" and leading to a "significant loss of competitiveness".

"There is a risk it will get worse if France does not adapt at the same pace as its trading partners in Europe, notably Italy and Spain," it said.

The IMF challenge had an added piquancy coming from a body headed by France's Christine Lagarde, widely touted as the next Gaulliste leader and a future rival for the French presidency.

The warning came as French industrialist Louis Gallois delivered a long-awaited report to Mr Hollande calling for "shock therapy" to stop the national rot, with drastic cuts in business payroll taxes to claw back loss ground against Germany and other EMU states.

Mr Gallois, ex-head of the EADS aerospace group and a revered figure in France, said all parties need to unite in a patriotic push to save the nation.

His report listed 22 measures. These include a €30bn cut in payroll levies, worth 1.5pc of GDP, to be offset by a higher VAT and other consumption taxes. The aim is to reduce the "tax wedge", or tax share of labour costs. This has risen to 50pc, among the world’s highest.

"The socialist government is not ready to confront the unions or reform the French economy funadamentally," said professor Dor from IESEG School of Management in Lille.

"We are wasting years. Unlike Germany, we don’t compete well in hi-tech areas and we face competition from Italy and Spain

[Right Wing Assault]

What? No, no! Eet eez eemposseebool to have taxes too high!

We need to keel off thee reech peepool by taxeeing zem to dett, no?

[Army Air Corps]

Gallic Ping.

[SunkenCiv]

Thanks bruinbirdman.

[Olog-hai]

Aw. The IMF tells the USA to raise taxes, but it tells France to lower ‘em. Shocking?

[blueunicorn6]

Let them eat snails! What? They do? On purpose? No kidding? I’ll be......maybe we should send them some chickens or something. Maybe they should quit growing all that wine and start growing some milk.