* Hollande planning measures to boost competitiveness
* Government resisting calls for "shock therapy"
PARIS Oct 28 Executives from nearly 100 of
France's biggest companies called on the Socialist government on
Sunday to cut payroll taxes by 30 billion euros ($39 billion)
over two years to regain waning competitiveness.
With the government preparing to unveil measures to boost
competitiveness next month, the executives said the tax cut
should be paid for by raising the value added sales tax and
cutting public spending.
In an joint appeal published in Le Journal du Dimanche
weekend newspaper, the executives from 98 companies said the
state should come up with 60 billion euros in savings over the
next five years.
President Francois Hollande's government is due to outline
measures to boost competitiveness on Nov. 6, a day after the
former head of the EADS aerospace group, Louis Gallois, hands in
a series of widely awaited recommendations.
Gallois has already said that to increase competitiveness,
France needs "shock therapy" through a rapid payroll tax cut
worth 30 to 50 billion euros financed by increasing other taxes.
However, Hollande has argued in favour of a more gradual
approach and is wary about raising taxes on consumers at a time
when they are reining in spending over concern about record
unemployment and a weak economic outlook.
"We have absolutely got to take action on competitiveness --
and I am hearing them (the bosses) -- but not with a shock,
rather with policies implemented over time," Finance Minister
Pierre Moscovici said on Canal+ television.
"It can't be done with a magic wand, it's got to be done
over the course of (Hollande's) five-year presidential term,"
French firms have lost market share internationally over the
last decade as their labour costs have risen, leaving the
country saddled with a record trade deficit of 70 billion euros
The executives said that the government should also cut
corporate taxes to the levels of those in neighbouring countries
and keep an existing tax credit for research spending.
Hollande's government's 2013 budget raises corporate tax on
big companies by 10 billion euros as part of the biggest
belt-tightening effort France has seen in 30 years.
However, the government has so far resisted calls from both
business and economists to cut public spending, which at 56
percent of gross domestic product is second only to Denmark
among developed countries.