The Macron government is continuing with its announced policy to make France attractive to business, reduce unemployment as a result, and ‘balance the books’ as required by the EU.
This ‘balancing the books’ involves reducing costs by reducing public expenditure on the one hand, but also on the other hand reducing public and business tax contributions. You get less public service, but you have more money in your bank account with which to buy what you need, goes the theory. Business pays less tax and smaller social security contributions, so that they can employ more people. A softening of unemployment protection helps that process too.
How people will react to this is not clear. The tax reforms for households are complex, gradually introduced and means tested, so any reduction won’t be felt immediately. On the other hand, the ending of the wealth tax on capital seems a clear hand out to the best off.
Plans to cut 10 billion euros in tax in 2018.
The government is gradually abolishing one local government tax, as well as gradually lowering unemployment and sickness contributions and also changing the way tax is paid on wealth.
The Tax on wealth up to now taxed both landed property and financial property (your yacht/private jet/art collection were and are left out). At the moment 343,000 households pay the Wealth Tax.
Now only land property will be taxed, the idea being to encourage the wealthy to use their bonds and shares for investments. The tax was called ‘Solidarity Wealth Tax’ (Impot Solidarité sur la Fortune, ‘ISF’). It would now be known as a Land Tax.
Income from capital (other than shares and bonds) will be taxed on a flat rate basis, the so-called ‘flat tax’ of 30%, which is another reduction for the best off, again with the trade-off that they will invest their increased income in job creating activities. The local government tax to be cut is called the ‘taxe d’habitation’ and it will be abolished except for the 20% richest gradually over three years.
The question is, naturally, since social security and local authorities still need financing, how will the shortfall be made up? This is another reason why tax cuts for households won’t necessarily create a feeling of improved income: the government will increase another tax, the so-called CSG or Generalised Social Contribution. The idea presumably is that on your pay slip, when you look at the list of deductions, there will be one line less, or the amount will be lower, hurray, but the next line will show an increase. Local authorities will receive funds directly from the government, i.e. from central taxes.
Continued attack on local authorities
The lowest level of local authorities, the ‘commune’ that is, town or village, used to raise 3 taxes, roughly from business, land and households. This ensured its autonomy and its links with the population. All this has been eroded over the years. Communes lost the business tax in 2010, and they are now losing the tax on ‘households’. The shortfall will be made up by the state, up to a point. It is a way of reducing the spending capacity of the commune. It also weakens the link between the authority and its population. The war against local authorities as political entities that both represent the state and represent the local population is continually being waged. As Simon Jenkins said in 2008 on that subject: “I am not starry eyed about the vigour of local democracy abroad. It is messy, bureaucratic and often corrupt. But it appears to yield communities more able to discipline themselves and their young, and more satisfied at the delivery of their public services.” Without local government, “There is nothing between the individual or family unit on the one hand and the central state on the other.” De Tocqueville describes this atomised society, where “every man is a stranger to the destiny of others. He is beside his fellow citizens but does not see them.” (Guardian 27.2.08)
But individualism is the goal and the aim of a modern government. There must be nothing between the individual and the state, and anything that supported the individual, be it union or local council, must be reduced and weakened. This policy is pursued relentlessly, even though the social advantages of having an elected mayor and municipal council are obvious. Let us take two examples.
Role of the Mayor
In July 2016 a priest was assassinated while conducting mass in his parish church, by two young followers of IS. This caused huge distress in France and in the little town directly affected. Both then and this year during ceremonies of commemoration, an important person representing the local population was interviewed in the media as a matter of course, and spoke movingly as leader and representative of the population: it was the Mayor. He happens to be a Communist, but that is mentioned in passing. What is important is his presence in the circumstances.
Macron is continuing the fight to create politicians who have no local power base by insisting on the end of the ‘double mandate’ i.e., you cannot be elected to both a national and regional seat. However until that great impoverishment and weakening of the political personnel (and of local authorities) has been achieved, he has to make do with politicians from the old system, people who learnt politics in real life, at local level, not just as aides to parliamentarians.
When he was elected, Macron chose various ministers from all parties and none, and chose as Prime Minister someone who was known as capable and experienced because he was Mayor of a large town: Edouard Philippe, mayor of Le Havre.
Children, the media tell the truth!
That was the theme of a series of programmes on State radio station France Inter this summer. Its journalists had gone into schools over the year and in collaboration with teachers initiated 13 and 14-year-olds from deprived areas to the difficulties of report making on the radio.
One group made a programme about Le Havre, and went there to interview fishermen and workers from the container port. The journalists listened to the reports the pupils had completed, and challenged every bit of waffle, which created an unusual experience for the listening public used to vague use of words on the part of interviewers and interviewees on France Inter. Then the journalists asked: What have you learnt this year about the job of journalist?’ One pupil answering ‘They tell the truth, if they can’ was challenged: What do you mean, ‘If they can??!!” and had to rephrase: “Journalists tell the truth”.
Part of the programme concerned the mayor of Le Havre, the now Prime Minister. He had said: “Jobs are more important than the environment.” Pupils were asked about this in the programme. ‘NO! the environment is more important.’ ‘Are you not worried about getting a job?’ ‘Yes I am, perhaps the Prime Minister is right.’ It was rare to have that realistic level of debate on radio on that subject.
The forthcoming election to the Senate.
The Senate represents local authorities, communes, departements and regions. It is elected not by universal suffrage but by ‘grands electeurs’ who are taken from local authorities by a complicated system; to give just one example, in a commune of less than 500 inhabitants the local council meets and elects one delegate, who will be their grand electeur. The Senate is renewed by half every three years. Macron is slightly handicapped here in not having ‘grands electeurs’ from his own party (La République en Marche, LRM) since that party didn’t exist last year. He needs a 3/5 majority of the Congress (both houses together) to make constitutional changes, this is what hangs on these elections, in September.
The French are not totally unconvinced there is a need to ‘balance the books’ and make France attractive to business by making it easier to sack people and by giving the wealthy more money supposedly to spend on job creation. On the other hand, they are not totally convinced either. There will be demonstrations in September by those who are convinced Macron’s way is the wrong way.