Sarkozy pushes new competitive plan, promises to raise sales tax
In April 2012, France will hold recurrent presidential election; however President Nicolas Sarkozy has not yet officially announced his candidacy for re-election.
Sarkozy said he still had time to do it.
"I have certain responsibilities the French people and since my term of office has not yet expired I shall use the time to work," he said.
Sarkozy's main contender is François Hollande (Socialist Party), who, according to French media, enjoys high rating. Anyway, the acting president has already presented his pre-election platform during his January 29 live interview with France 24. He announced measures aimed at improving the country's competitiveness, as well as his economic record, three months ahead of the spring presidential election.
To help safeguard industrial jobs, Mr. Sarkozy said his government would shift part of social-welfare costs from companies onto consumers by reducing payroll taxes and increasing the value-added tax, a levy similar to sales taxes in the U.S., to 21.2% from 19.6%. This is to subsidize the social security system expenses and reduce the number of unemployed which totals 3 million in the country.
Mr. Sarkozy's government has said cutting payroll taxes would act as a powerful tool to protect French jobs, which are increasingly being relocated to lower-cost countries. In addition to increasing VAT, the French president said he would also propose raising a tax on financial revenue.
French companies would enjoy lower labor costs while imported products, which would share the higher VAT-tax burden, would help finance France's welfare system.
Germany increased its VAT to 19% from 16% in 2007 to shift part of the burden of social welfare onto consumers.
Nicolas Sarkozy has pledged that the package of reforms will help France successfully overcome the financial crisis. He also suggests carrying out financial reforms in other EU countries.
