French Finance Minister Francois Baroin said the government hasn’t decided how to cut labor costs, contradicting other Cabinet members who said some salary taxes could be shifted to value-added taxes.
“The VAT raise is an option, but we cannot exclude others,” Baroin said on France Info radio in Paris today. “There is a French weakness and it’s labor costs. So we must imagine measures to lower them, that’s the political project. Raising the net income of workers, that’s the aim.”
President Nicolas Sarkozy is meeting with labor and business leaders on Jan. 18 to discuss ways of cutting the cost of labor by reducing the role of social charges on salaries in paying for France’s welfare state.