The French government will dole out an additional €1 billion in stimulus funds to support the industrial sector and accelerate the rollout of the coronavirus recovery package, Finance Minister Bruno Le Maire said.
Speaking at a March 1 press briefing, Le Maire said the government has already deployed €26 billion in stimulus funds this year — including a €10 billion decrease in production taxes. He added that he wants to speed up the rollout of €40 billion in stimulus funding in an effort to reach 6 percent economic growth.
In September 2020 Prime Minister Jean Castex introduced a €100 billion recovery plan that will deliver €20 billion in production tax cuts over two years for domestic companies and provide tax credits to promote green energy practices. Le Maire said the relief plan is a chance for France to advance the digitalization and environmental sustainability of the economy.
The extra €1 billion for the industrial sector will be reallocated from programs that have not used the funds quickly enough, according to Le Maire. He did not specify which programs would lose funding.
Le Maire said funding for the relocation of factories from abroad to France will increase from €600 million to €850 million, subsidies for industrial expansion investments will increase from €400 million to €550 million, and financing for the digitalization of small and medium-size industrial businesses will increase from €280 million to €880 million.
The €10 billion in industrial tax cuts will benefit 600,000 companies in France, Le Maire said.
France has implemented a 50 percent reduction in businesses’ production taxes by eliminating the regional share of the company value added contribution (CVAE), said Le Maire. To compensate regional governments for the roughly €10 billion in lost 2020 CVAE revenue, France will return the equivalent amount in VAT, he said. According to the government’s September 2020 recovery plan, French municipalities will receive compensation for tax relief for industrial establishments from a new levy on state revenue totaling €3.3 billion.
Stimulus fund rollouts are dependent on regional governments signing agreements with the federal government, said Le Maire. So far, seven agreements out of 800 have been signed. To obtain funding, governments should submit stimulus contracts that include a commitment to ecological transition by June 30, he said.