A very different approach to crisis across the Channel
There's a yawning budget deficit, unemployment, already plenty high enough, is set to get worse and public finances are in dire straits. Growth is, at best, flat; competitiveness is poor; manufacturing is in decline and the country's credit rating remains under pressure. And with public debt spiralling, the most unpalatable political medicine of all must be administered. Tax hikes.
For once, however, it will not be the poor or even the middle classes that will be hit hardest as the government writes out its palliative prescription. The rich are going to take the hit this time, the prime minister says.
How refreshing it is that the new tax increases that have been announced to plug the gaping hole in the budget to the tune of almost �6bn mainly target the wealthiest households and biggest corporations.
The raid on the wealthy fulfils the election promise: 'If there are sacrifices to be made – and there will be – then it will be for the wealthiest to make them.'
The measures include a higher tax levy on those with net wealth of more than �1m and inheritance tax will be tightened. Banks and oil companies will face new and higher taxes and businesses will pay an extra 3pc on the dividends they distribute once or twice a year – often with little regard to how they are performing – to keep their shareholders sweet. The idea is that it will encourage firms to use more of any spare cash to invest in their operations to make them more competitive on the world stage. Oh, and taxation on financial transactions will be doubled.
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The prime minister told parliament that he wasn't the enemy of money and that while tax increases would apply to big corporations, small businesses would be the beneficiaries of tax reduction initiatives.
The introduction of a 75pc tax on pay packets that exceed �800,000 will come next year.
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- 5 9 pubs and restaurants which have had lockdown makeovers
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The public love it – in a poll, three quarters of them, including most who consider themselves right wing, said they approved of the moves.
Of course, this alone won't drag the country entirely out of the red; there will still have to be public sector and welfare cuts but with the wealthy taking their share of the pain, it'll all seem a little fairer. A little more as though everyone is in it together. Or maybe more appropriately given where we are, all for one and one for all.
So far, if you think you've been dreaming, you are. Or you live here in France. You will have realised long ago that all the above are the policies and pronouncements of President Francois Hollande and Prime Minister Jean-Marc Ayrault whose country's republican history didn't start and end with a brief flirtation with Oliver Cromwell. Here, they guillotined the aristocracy and have stuck, by and large, with a policy of keeping toffs in their place, making soaking the rich a bit of a national sport.
Predictably, our own prime minister's reaction to such policies is hardly designed to make the entente of traditionally strained Anglo-French relations any more cordiale. They play on his well-worn but entirely unproven theory that taxing the rich (or even attacking their bonuses) will have them fleeing the country. He thinks French firms will do the same and has undertaken to 'roll out the red carpet' to those seeking economic asylum across La Manche.
I'm no expert in either French politics or economics but I've been keeping my ear to the ground, asking a few questions and making a few observations. What follows is therefore strictly anecdotal.
Here in the Pays de Savoie there are, as in many parts of Britain, two very different economies. Rich commuters cross a barely existent border to earn their money in Switzerland and enjoy high living back home in the Haute Savoie, well off tourists from all over Europe enjoy arguably the best Alpine ski slopes in winter, but motor engineering supply factories pollute the Vall�e de l'Arve and few now make a living from agriculture and farming as they once did. That said, the Savoie valleys no longer face the excruciating poverty and unemployment that saw agile mountain-climbing children sent off to clean the chimneys of Paris in red caps and with a hedgehog strapped to their backs as a soot cleaning squeegee (honest, that's what the guidebook says).
I asked a local who works in the tourist industry what he and his family thought about the tax changes.
'The deficit has to be reduced somehow,' he said. 'We don't have a lot of money, but this is a good place to be poor in.' Healthcare was particularly good, paid for mostly by the state and topped up by a mutual insurance scheme that everyone pays into. As a visitor to what seems to be an excellent local hospital, I have no reason to doubt him. The car park, by the way, was free.
For the other side of the story and failing, in my circle of acquaintances here, to find anyone rich, I asked someone who labours directly for someone very rich what his boss thought about being taxed until his pips squeaked.
He might complain, but he comes from around here. He'll likely offer up a shrug and accept the new regime with Gallic indifference, says my informant, certain that the foreign companies will go on hiring the properties in the multi-million portfolio he has built up in the mountains and on the coast down south. He will be a little poorer, but not enough to notice; not enough to flee his country.