The Strategist

France to relax financial regulation


07/11/2017 - 08:46



France will continue to lower taxes, thus fulfilling promise of the country’s new President Emmanuel Macron, a source in the Ministry of Finance said. Macron intends to proceed with the new policy despite the official state audit body’s warnings about a budget hole of € 8 billion ($ 9.1 billion), Reuters writes.



Jérémy Barande
Jérémy Barande
At a rally on Sunday, President said that reducing the property tax and luxury tax for 80% for current payers will have an effect in 2018, a source in the Cabinet said.

President's intervention occured a few days after his Prime Minister Edouard Philippe suggested that the tax cuts would be postponed until 2019, as France struggles to contain its state deficit.

Last month, French auditors said that the budget deficit left by former President François Hollande's government would result in a deficit of 3.2%, while Hollande’s government reported a deficit of 2.8%.

Macron promised to achieve a deficit of 3% in 2017, which is the target for the European Union. However, his last promises to cut property taxes and luxury taxes could increase the burden on the budget revenue in the coming years.

Last week, the French government announced its intention to cancel some of the fees levied on banks in France, and make sure that the banking sector in the country is not overly regulated in comparison with other European countries, as the country's authorities want to lure the banking business from London.

In a document presented by Prime Minister Hollande, the government decided to abandon the highest wage tax rate for firms such as banks that do not pay VAT, cancel the planned extension of the tax on stock trading, and also make sure that bankers' bonuses are no longer Will be taken into account when labor courts decide on unfair compensation for dismissal.

The wage tax in France is levied on banks and companies from other sectors, such as real estate and health care. Companies pay this tax for each employee they hire. Such a tax does not exist in most other European countries.

The document also notes the need to consider how to translate a number of rules of EU financial regulators into French legislation.

French law is often overregulated, and this will become particularly noticeable when a number of European standards in the financial sector will be applied to the country’s financial sector, according to a document published by the office of the Prime Minister.

"This may impose an additional burden on the business compared to European competitors," the French cabinet said.

source: reuters.com




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