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French aerospace industry calls for bigger tax credits
January 8, 2014 / 3:35 PM / in 4 years

French aerospace industry calls for bigger tax credits

* Govt’s tax credits aimed to foster competitiveness

* Aerospace says exporters not benefiting

* Govt to hold talks with business on tax reform

By Tim Hepher

PARIS, Jan 8 (Reuters) - France’s aerospace industry urged the government on Wednesday to widen a corporate tax credit scheme designed to foster competitiveness, saying it had helped the country’s low-paid postal workers but not its exporters.

France passed a law in late 2012 offering tax credits to businesses with the aim of cutting the cost of employing people by 20 billion euros ($27 billion) annually from 2015.

The credits are based on the number of employees earning up to 2.5 times the minimum wage and are intended to boost investment, training and jobs.

France’s aerospace industry, which includes Airbus, the world’s second-largest planemaker, said this should be increased to 3.5 times the national minimum wage.

“That would start to have a significant impact,” Marwan Lahoud, president of the GIFAS aerospace industry association, told a news conference.

The benefits to aerospace of the current threshold were so small as to be equivalent to statistical “noise”, he said.

Aerospace is France’s largest export sector and Lahoud, who is also the strategy chief of Airbus Group, said the current scheme had mostly failed to feed through to the export sector because of higher average salaries in that part of the economy.

Desperate to revive the euro zone’s second-biggest economy in the face of near record high unemployment, President Francois Hollande said in his new year’s address that he would cut companies’ labour costs further in exchange for firms hiring more workers.

The Finance Ministry is due to hold talks with business chiefs on tax reform later this month.

Lahoud said France’s post office had been among the biggest beneficiaries of the tax credit scheme.

Though the government had hoped the scheme would boost exporters in particular, tax experts say the construction and service industries have benefited most so far.

The aerospace industry is one of the rare sectors in France that has enjoyed strong exports in recent years as most other manufacturers have steadily shed foreign market share.

Shares in aerospace firms such as Airbus Group and Safran have doubled in the past year as the industry stacked up record orders. Critics say it does not need any further public support but aerospace bosses say the industry supports skilled employment capable of stimulating the rest of the economy.

The French aerospace sector employs 170,000 people at an average gross annual salary of 48,000 euros, a spokesman for GIFAS said. It produced combined revenues of 48.4 billion euros in 2012. ($1 = 0.7349 euros) (Editing by Leigh Thomas and Susan Fenton)

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