A “budget recessive”. Patrick Martin, President of the French employers’ federation (Medef), denounced in the columns of Parisian this Saturday, November 16 the government’s plan for public finances in 2025 and advocated the introduction of a “social VATwarning that with the planned tax hikes, French companies were likely to hire less and cut jobs.

“If we add together the 4 billion euros in cuts in social security contributions, the 2.5 billion euros transferred from health insurance to supplementary health insurance – and therefore to companies – and the 1.5 billion euros in savings on apprenticeship subsidies, we come up with 8 billion euros in higher labor costs. This corresponds to the average annual gross salaries of 300,000 employees”.he estimates. And he warns that “if companies no longer have this money, they will inevitably hire less, cut jobs if necessary, and won’t be able to raise wages as much as they’d like”.

“The gap will widen with the United States”

Comparing the “tax surcharge on large companies in France to “lowering the corporate tax rate to 20%”. announced by U.S. President-elect Donald Trump he believes that “the gap (…) will widen even further with the United States.”. “Between tax hikes and job creation, you have to choose. As written, this budget is recessionary”.the head of the employers’ organization argues, in stark contrast to his previous position on the budget, according to which companies were ready to take action. “to contribute to the war effort”..

“The government had promised a balance of efforts: one third from taxpayers, including businesses, and two thirds from cuts in structural state spending. In reality, in the current project, the opposite is true. (…) The conditions have therefore not been met”.he believes.

“Lack of courage” on pensions

Instead, he advocates “social VAT” : “Why not think about lowering payroll taxes and raising VAT by one point, except of course on basic necessities”.. “This would bring in around 10 billion euros for the State and would have the merit of reducing the cost of labor and increasing the take-home pay of all employees. What’s more, VAT applies to imports but not to exports. This favors French competitiveness”.adds Patrick Martin.

The centrist senators, an important force in the Senate majority, last week proposed increasing VAT and working hours in the budget debates. “To rebalance the effort”Patrick Martin also suggests “make another trade-off between retirees and working people”.considering that “Parliament has lacked political courage”. on indexing pensions to inflation.