France is planning a €100 billion economic stimulus package that will include €20 billion in production tax cuts over two years for domestic industry.
“It will be a massive drop, twice €10 billion — €10 billion in 2021, €10 billion in 2022,” said Finance Minister Bruno Le Maire in a July 15 interview with France 2 television.
In an address to the National Assembly July 15, newly appointed Prime Minister Jean Castex announced that the €100 billion stimulus plan will launch in September and cover all major economic sectors. He said the tax cuts will be included in €40 billion dedicated to supporting existing manufacturing businesses and encouraging new industrial and technological business development.
“We will reduce the taxes that weigh on production in France, we will develop the technologies of the future on our territory, we will reduce our carbon footprint, we will accelerate the digitization of businesses and administrations,” Castex said.
The government will discuss the €40 billion in support for industry with employers and unions July 17, Castex said. Companies given aid under the new plan will be expected to moderate the distribution of dividends to shareholders, he added.
French companies have collectively lost €147 billion in operations because of the COVID-19 pandemic, according to the French Insurance Federation.
Le Maire did not say which production taxes would decrease, but he has advocated previously for cuts in the contribution on the value added of businesses and the social contribution of corporate solidarity.
"If you want industrial companies to set up in the [French] territories, they must not pay before they even make a profit — five times more production taxes than in Germany,” Le Maire told France 2. “Producing in France will be cheaper; it's as simple as that.”
The recovery plan will also mobilize over €20 billion for a green economic transition, including the thermal renovation of buildings, reduction of emissions from transportation and industries, production of more sustainable and local food, better recycling, less waste, and support for green technologies like batteries, Castex said. In June President Emmanuel Macron pledged €15 billion to promote France’s transition to a green economy, following the release of the Citizens’ Convention on Climate final report.
European Council President Charles Michel backed France and Germany’s €500 billion green recovery proposal when he revealed his proposal for the EU’s long-term budget and coronavirus recovery fund July 10. EU leaders will discuss the proposal in Brussels at a special European Council meeting July 17-18.
France hopes to receive €40 billion from the proposed €750 billion EU recovery fund, which would cover 40 percent of the new stimulus plan, The Irish Times reported.
Representatives for Castex did not return requests for comment by press time.