France chops red tape to save firms billions of euros

PARIS Mon Apr 14, 2014 8:32am EDT

French President Francois Hollande addresses the audience at the National Aeronautic University of Queretaro in Queretaro April 11, 2014. REUTERS/Henry Romero

French President Francois Hollande addresses the audience at the National Aeronautic University of Queretaro in Queretaro April 11, 2014.

Credit: Reuters/Henry Romero

PARIS (Reuters) - A panel created by President Francois Hollande to cut red tape for French business announced 50 measures on Monday aimed at saving billions of euros a year, as his government seeks to revive a struggling economy.

The measures will untangle a thicket of rules - including, for example, a requirement that bakers inform local police of their holiday plans - which are seen as preventing small and big business from flourishing in France.

The so-called "simplification blitz" is part of Hollande's wider moves to cut payroll charges on French companies by 30 billion euros ($42 billion) during his mandate. Corporate tax cuts were announced earlier this month.

"We've revved up the simplification machine and it's going to run for the next three years," said Thierry Mandon, a Socialist lawmaker who co-authored the list of proposals. "This policy aims to save our companies time and money by cutting administrative costs that are excessive or useless."

French corporate margins are the lowest in the euro zone. Hollande, who is fighting to bring joblessness down from above 10 percent, hopes the measures will stimulate hiring by saving companies billions of euros (dollars), following similar initiatives in Britain and Germany.

The two countries saved companies 1.5 and 2 billion euros per year, respectively, over a decade by lowering paperwork costs by about 25 percent, Mandon told Reuters. The aim is for the French measures to be in place by the end of this year.

SELF-IMPOSED HURDLES

Some measures proposed by Mandon aim to scrap antiquated or arcane rules, such as the one requiring bakers to declare their summer holiday plans.

"That dates back to the 1930s when we were afraid of lacking for bread!" Mandon said.

Others aim to simplify business life by standardizing the use of terms - depending on context, there are no fewer than four meanings for the word "day" - or cutting the number of lines on payslips down to six from 25 to 30 currently.

That measure alone would entail reducing the number of agencies in charge of collecting social charges - currently above 200 - to about 20, a massive undertaking which Mandon estimates could take 24 months to complete.

Entrepreneurs will have an easier time registering new companies, while smaller firms will no longer have to submit dozens of documents in duplicate to several administrative centers in order to join a public call for tenders.

"France is a masochistic athlete that sets up hurdles for itself when its competitors are knocking them down," Guillaume Cairou, head of the Club des Entrepreneurs, said in a statement. "The pileup of regulation is just as intolerable for our companies as it is for foreign investors whose money ends up fleeing our country."

In a first phase of simplification, the government did away with the Bank of France's practice of stamping the number "040" on the file of anyone who had a business bankruptcy in the past, making it very difficult for them to regain access to credit.

Now all companies will be covered by a so-called "zero new cost" pledge by which the government vows not to impose extra charges on firms as a result of new rules or laws.

"Any new cost will be offset by a reduction that is at least equivalent to the cost," said Mandon's report, which sums up the conclusions of an expert commission.

The measures will also prevent tax authorities from seeking retroactive payments on levies that have been imposed during the year, a major bugbear of companies at a time of frequent changes to tax rules.

Mandon added that the commission aims to propose new simplification measures every six months, with a next batch due in September, until the end of Hollande's term in 2017. ($1 = 0.7201 Euros)

(Additional reporting Emmanuel Jarry and Nicholas Vinocur; editing by Mark John, Larry King)

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