Tax Revolts Hit Hollande as Farmers, Soccer Clubs Protest

Photographer: Balint Porneczi/Bloomberg

Francois Hollande, France's president. Close

Francois Hollande, France's president.

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Photographer: Balint Porneczi/Bloomberg

Francois Hollande, France's president.

French President Francois Hollande’s taxes, among the world’s highest, have made strange bedfellows out of the country’s soccer clubs and farmers in Brittany.

Revolts against a series of levies have erupted with protests by farmers in Brittany against a trucking tax on Oct. 27 leaving several people injured, and soccer clubs refusing to play a round of league matches in November to oppose a tax on salaries of more than 1 million euros ($1.38 million). Hollande has said he won’t budge on the millionaire tax, while Prime Minister Jean-Marc Ayrault said today he’s suspending the levy on truckers transporting agricultural products for now.

The Socialist president, who turned to increased taxes to narrow the country’s budget gap, has backed down on other levies in the face of objections. On Oct. 27, he gave up on a plan to lift taxation on savings, just weeks after backing off a new levy on corporate earnings. The U-turns have dented his credibility at a time when the economy is recovering and a two-year-long rise in joblessness is ending.

“The cumulative effect of these retreats is that they confirm in many voters’ eyes that the government is struggling to govern,” said Bruno Jeanbart, a director of Paris-based pollster OpinionWay. “Even Hollande’s own supporters question if he’s up to the job. The problem for the president is that every time there’s good news, it’s marred by political errors.”

Most Unpopular

Hollande’s ratings in polls have sunk, making him the country’s most unpopular president. A BVA poll published last night showed Hollande’s approval rating dropping six points in the past month to 26 percent, the lowest level for any president under France’s current constitution.

In another poll by OpinionWay, his approval rating fell 3 points to 26 percent in October. Among Socialists, it dropped to 52 percent, from about 90 percent when he took office in May 2012, OpinionWay said.

The revolts reflect discontent with taxes that have risen by 70 billion euros in three years. France’s tax burden was 46.3 percent of gross domestic product last year, up two percentage points from 2011 when it was already the third-highest in the world behind Belgium and Denmark, according to the Organization for Economic Cooperation and Development.

“There’s no more room to raise taxes,” said Laurent Dubois, a professor at the Institute of Political Studies in Paris. “The French feel taxes are going up and purchasing power is going down. They voted for Hollande thinking they’d afford austerity; that the rich would pay. They realize now that that’s not possible. There aren’t enough rich people.”

‘Fed Up’

Finance Minister Pierre Moscovici, who said as early as August that he understood people were “fed up” with taxes, said on Oct. 27 that the decision to abandon a plan to apply a higher levy retroactively to gains on savings plans for equities and house purchases shows the government is “sensitive to tensions” and “open to dialog.”

“When we show we can listen to what’s going on in a country that’s so fragile, it’s a virtue,” Moscovici said on Europe 1 radio.

The reversal over the taxation of savings plans echoes that at the beginning of the month on corporate earnings. Hollande had proposed to shift taxation from sales to operating profit as part of its 2014 budget to raise 2.5 billion euros.

Following howls of protest from business leaders, he dropped the new levy in favor of raising the normal corporate tax rate to 38 percent.

Farmers’ Fury

In Brittany -- the western-most province of France -- where dairy and pig farmers are struggling to survive, efforts to impose an environmental tax on truckers who carry agricultural produce sparked a fury.

“The region’s industry and agriculture are going through a very tough time,” billionaire Vincent Bollore, who hails from the region, said on Europe 1 radio today. “They should be helped, not taxed. Farmers don’t pollute. They should not be the ones to be slapped with an environmental tax.”

While Prime Minister Ayrault said the suspension of the tax today was aimed at leaving time for discussions, Industry Minister Arnaud Montebourg said in an interview on France 5 last night that a compromise will have to be reached.

“If we don’t have the tax we can no longer restart public works projects, renovate roads including the high-speed train links that all lawmakers are asking us for,” he said. “We will have to make a choice. We will have to find an agreement.”

Soccer Woes

On soccer clubs, Hollande has said he intends to hold his ground on a pledge to tax salaried earnings of more than 1 million euros at a rate of 75 percent for two years. French soccer clubs said last week they won’t play a round of league matches during the last weekend in November to protest the tax.

For some unprofitable clubs, the extra burden is a threat to survival, according to the Ligue de Football Professionnel.

“The consequences of this measure will be dramatic,” said Frederic Thiriez, head of the LFP, said in a statement. “France must be the only country that taxes money-losing companies.”

The clubs, which are canceling matches between Nov. 29 and Dec. 2, are asking the government to abandon the tax.

The million-euro salary levy is one that is popular. About 83 percent of French say the soccer strike is unjustified, according to a poll by Opinion Way for LCI television.

Suspicious French

The European Commission has called on Hollande to keep down taxes and focus on trimming public spending. Hollande has promised to cap the deficit mostly by shrinking spending next year. That won’t make the French happy either, said Emmanuel Riviere, a pollster at TNS Sofres in Paris.

“The French want the deficit addressed and spending reduced but they don’t want to give up their services and social protection,” he said. “Faced with this contradiction, Hollande has been ambiguous. The result is that the French are now suspicious that the government isn’t telling them the truth.”

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net; Craig Stirling at cstirling1@bloomberg.net

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