EU's Rehn says France should stop raising taxes

[dipsydoodle]

Source: Reuters

(Reuters) - France has reached the point when it can no longer increase taxes without harming growth and costing jobs, the European Commission's economic chief Olli Rehn said in remarks published on Sunday.

Plans by Socialist President Francois Hollande to wring a further 6 billion euros out of the economy in taxes in the 2014 budget have angered businesses and households and prompted the IMF to warn that more tax rises could stifle a fragile economic recovery.
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When asked whether tax hikes should stop, Rehn said: "Absolutely. The tax increases in France have reached their fateful point. Raising new taxes would break growth and weigh on employment," he said. "Budgetary discipline must come a reduction in public spending and not new taxes."

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The French tax burden is already one of the heaviest in the world. At 44.2 percent of GDP, it ranks behind only Denmark and Sweden among the 34 members of the Organisation for Economic Cooperation and Development.

Read more: http://uk.reuters.com/article/2013/08/25/uk-france-tax-rehn-idUKBRE97O04820130825

[caseymoz]

1. Seems unlikely.

Tax money doesn't get flushed down the toilet. Forty-four point two percent of France's GDP isn't removed from the economy. Unless there are government officials getting rich it of the revenues, the money circulates back into the economy, usually, back to pay people for some good or service that's provided to others.

It's about time we dispel this anti-tax myth. All it does to us now is assure that the very rich become much richer.

[dipsydoodle]

2. It was however a top heavy public sector which screwed Greece.

.

[Mark Baker]

4. Not really

As a proportion of GDP their public sector spending was not all that excessive - and there's no reason to believe that it would be a problem even if it was much higher.

The problem was that public spending was higher than tax take, which is another matter entirely. And in the case of Greece, this was mainly because of very high rates of tax evasion.

[Morganfleeman]

3. France has extremely uncompetitive labor laws

German tax revenues as a percentage of GDP are not wildly different than the corresponding French figures and German unemployment is less than half of French unemployment. Germany has a competitive labor market and France does not, period. I live in London and we have the French coming here in droves for better opportunity as quite frankly, the French economy is in the toilet (which is saying something considering the British economy is not exactly chugging along).

[caseymoz]

6. That's another issue entirely.

Except if the economy's bad, the people you're taxing then don't have a lot of money to carry the burden, but I'm thinking the taxes are probably progressive.

[MADem]

5. Johnny Depp (who skeedaddled from France) and Gerard Depardieu (who is nominally a Russian, now)

would agree!

I think Hollande has a tough slog ahead.