Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
and economic freedom

France – one more step towards planned economy

The French government is considering the possibility to force companies that have paid higher dividends to their shareholders in 2010 and have more than 50 employees to pay a € 1000 bonus to each of their employees. As usual, the details of the plan are still being debated: will it be mandatory or will the government simply give financial incentives (such as exemptions of labor taxes on the €1,000 bonus)? Still, the move reveals where the French government stands. Firstly, the government is still thinking along Keynesian lines: the idea behind the measure is to boost aggregate demand (some 8 mln workers are potentially concerned). Secondly, and most importantly, this decision perfectly reflects the general policy followed by France since the election of Sarkozy in 2007: instead of the announced free-market, limited government policy, Sarkozy is serving us planned economy à la Soviet. Not content with high taxes and regulations, the State would now like to dictate what should be done with the wealth created. What would be the next step? Price controls would fit perfectly in the picture……

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