After pigeons, 'chicks' battle French entrepreneur rules

French Minister for Industrial Recovery Arnaud Montebourg waves goodbye after attending a ministers' meeting at the Elysee Palace in Paris May 6, 2013.

PARIS (Reuters) - Seven months after a pressure group called "The Pigeons" forced the French government to scrap tax rises on entrepreneurs, a new movement called "The Chicks" has won a quick victory over plans to curb other advantages for the self-employed.

"Les Poussins", backed by more than 30,000 online supporters in a matter of days, challenged a government proposal to reduce to two years the time that self-employed people can claim the advantageous status of "auto-entrepreneur".

Eager to contain the revolt, Prime Minister Jean-Marc Ayrault insisted on Friday that the proposal would only apply to construction workers.

The auto-entrepreneur status, used by everyone from foreign language teachers to people building up businesses, reduces red tape and allows social security charges to be paid as earnings come in, rather than upfront.

"Don't kill our projects in the egg," reads a placard held by a peeved-looking cartoon chick sporting sunglasses and a mohican-like quiff on the www.defensepoussins.fr site.

The group says curbs on the special status would destroy entrepreneurship and limit future job creation.

Some 900,000 people have joined the auto-entrepreneur system since then-President Nicolas Sarkozy launched it in 2009 and it produces revenues of 5 billion euros ($6.53 billion) annually. Since it was started, it has earned more than 5 billion euros in tax for the state, according to the Chicks.

The plan by Industry Minister Arnaud Montebourg and a junior trade minister, Sylvia Pinel, to rein it in was aimed at curbing abuse of the system. But it also risked hardening impressions that Socialist President Francois Hollande is anti-business.

However, Ayrault said that plan would require only construction workers to drop the status after two years if their businesses proved viable. They would then have to found a full-fledged company, which would pay higher social charges.

"For everyone else there is no reason to be afraid," he told journalists.

The Chicks, set up on April 13 by 19-year-old video games creator Adrien Sergent, had more than 30,000 signatures on its online petition by late Friday.

The group had sought to talk with the government, whose negotiations on the issue with the French Federation of Auto-Entrepreneurs broke down this week.

Sergent said clamping down on a system he said had helped create more than a million small businesses was irresponsible.

"Without this regime I would never have been able to create my business at 16 years old," he said. "Today I have real prospects for the future and I know that young entrepreneurs like me are the motor of tomorrow's economy."

France's economy slipped into recession again in the first quarter and jobless figures hit another new record in April following two years of uninterrupted monthly rises.

Last October's online revolt by the Pigeons - a word which in French is also slang for "suckers" - forced the government to grant exemptions to small business owners from increases in capital gains tax in the 2013 budget to as high as 60 percent.

Capital gains taxes are a discouragement to entrepreneurs who can spend years working around the clock on a minimal income to build a business they hope to one day sell for a big profit.

(Additional reporting by Gerard Bon; Editing by Mark Heinrich)