“This 2025 budget is recessive”, tackles the boss of Medef

And «budget recessive”. The president of Medef Patrick Martin denounced in the columns of Parisian this Saturday, November 16, the government's project for public finances in 2025 and advocated the establishment of a “Social VAT”warning that with the planned tax increases, French companies risked hiring less and cutting jobs.

“If we combine the 4 billion euros in reductions in charges, the 2.5 billion euros transferred from health insurance to complementary health insurance – and, therefore, to businesses -, the 1.5 billion euros in savings on learning aid, that adds up to 8 billion euros in labor costs. Which corresponds to the average annual gross salaries of 300,000 employees.he believes. And to warn that “if companies no longer have this money, they will inevitably hire less, cut jobs if necessary and they will not be able to increase salaries as much as they would like.”

“The gap will widen with the United States”

Comparing the “tax surcharge” on large companies in France “the reduction to 20% of the corporate tax rate” announced by US President-elect Donald Trump, he believes that “the gap (…) will widen further with the United States”. “Between tax increases and job creation, we have to choose. As it is written, this budget is recessive”says the leader of the employers' organization in a speech that contrasts with the position previously displayed on the budget, according to which companies were ready “to contribute to the war effort”.

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

“Lack of courage” on pensions

Rather, he advocates a “Social VAT” : “why not think about reducing contributions on salaries and increasing VAT by one point, except of course on essential products”. “This would bring in around 10 billion euros to the State and would have the merit of reducing labor costs and increasing the net salary of all employees. Additionally, VAT applies to imports but not to exports. What promotes French competitiveness”adds Patrick Martin.

Centrist senators, an important force in the majority in the Senate, proposed last week to increase VAT and working hours in the budget debates. “To rebalance the effort”Patrick Martin also suggests “make another arbitration between retirees and active workers”believing that “Parliament lacked political courage” on the indexation of pensions to inflation.