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ORIGINAL FRENCH ARTICLE: Un eldorado pour le capital

by Pierre Ivorra

An El Dorado for capital

Translated Thursday 8 April 2010, by Allen G Harris Jr. and reviewed by Henry Crapo

An official body highlights the fiscal attractiveness of labour costs in France for foreign investors.

A visit to the Internet site of Invest in France (IFA), a body linked to the Ministry of Finance, can be quite informative. In the document titled "Doing Business 2009", one can discover, notably, that France has become a "new tax El Dorado for holding companies," according to two lawyers writing in a contributing article. It enumerates the provisions that make our country one of "the most attractive countries in which to set up holding companies": tax exemptions allowed for holding-company profits; tax exemptions on dividends received from subsidiaries; and exemptions on capital gains generated by equity share transfers. And IFA does not stop there. In another document titled "Ten reasons to invest in France," it explains that "real estate, labour and electricity costs" in the country are "particularly advantageous," that the work force is "among the most productive in the world" and that "with the research tax credit, France provides Europe’s most attractive tax incentive for research and development."

IFA is careful to specify the cost of this "attractiveness": 6.1 billion € in losses for the state budget because of capital gains exemptions in 2009, a similar amount lost because of the suppression of the professional tax (a local tax on businesses); and 4 billion € lost because of the research tax credit in 2010. The financial newspaper Les Echos, which has its own keen business sense, pointed out yesterday (March 10) that between 2007 and 2008, "companies obtained 11.8 billion € in new relief, including 6.3 billion € in corporate taxes." Budget deficit, here we come!

Nicolas Sarkozy’s cherished Grand Paris urban renewal plan — and cherished is the word, in fact — is about making the country and its capital city a magnet for multinational companies, to the detriment of the living and working conditions of wage workers and of the general public. In parallel to this effort to make foreign investment secure and profitable, France’s unemployment level continues to rise. Presently at 10 percent, it is one of the highest in Europe.

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