Hoping to 'Shock' Europe, Sarkozy Proposes Robin Hood Tax
Facing tough re-election campaign, the French president pushes new economic plan, including financial transaction tax
President Nicholas Sarkozy said that France would go it alone on a financial transaction tax (FTT), sometimes referred to as a 'Robin Hood tax' or Tobin Tax after the US economist, James Tobin, who first proposed a small tax on financial trades in the 1970's. Sarkozy's proposal would be a 0.1% levy on stock trades and other financial deals. Other European countries -- most notably the United Kingdom and Germany -- have opposed a EU-wide FTT, leaving France to implement the tax in isolation. As Sarkozy said during an aired interview on French TV Sunday night, the move intends to "provoke a shock and set an example" for the rest of Europe.
France 24 reports additional aspects of the Sarkozy plan and reactions from political rivals on his left:
The two chief economic proposals Sarkozy revealed in an-hour long interview were plans to raise the normal level of VAT by 1.6 per cent to 21.2 percent and introduce a 0.1 percent "Robin Hood" financial transaction tax.
The VAT increase would help finance an expected cut in payroll charges for employers, a measure Sarkozy believes will help French industry become more competitive.
He also wants to increase the number of young people taken on as apprentices and create a new bank to invest in French industry.
But his rivals were dismissive of the proposals.
“I think he has maybe forgotten the fact he was talking about his France – a France where nothing works and nothing is produced,” said Pierre Moscovici, who is managing [Socialist candidate Francoise] Hollande’s presidential campaign.
“It’s a France of massive unemployment. That’s what he created. Everything he is proposing is bad for employees and will lead to massive injustice,” Moscovici added.
Eva Joly, the presidential candidate for the Green Party, also had scathing words for Sarkozy after his TV performance.
“Mr Sarkozy is finishing his mandate in the same way he began it, by protecting the rich,” she said.
As many observers note, it would be short-sighted to look at Sarkozy's economic proposals outside the context of the upcoming French presidential elections. Though Sarkozy has not officially announced his re-election bid, Sunday's proposals clearly indicate the platform he would run on and send signals about the pressures being applied to Sarkozy by his politcal opponents. Reuters reports:
Sarkozy, who is running far behind Socialist challenger Francois Hollande in opinion polls for the election, said he would raise the VAT rate to 21.2 percent from 19.6 percent from October to fund a reduction in social charges on companies.
The move, which Sarkozy first alluded to in a New Year's speech, is aimed at narrowing a competitiveness gap with Germany that is weighing on French growth, but it risks angering voters.
Among other measures, Sarkozy said he would set up an industrial investment bank in February with a billion euros in capital that will lend to small and medium-sized businesses struggling to obtain financing in today's climate.
He also said companies with more than 250 employees would be obliged to take on interns to the level of 5 percent of total staff, as a way of helping reduce chronic youth unemployment.
Sarkozy said he had a duty as president to hold off announcing his re-election bid until as late as possible.
Yet his interview, broadcast live across eight TV channels, seemed timed to respond to a series of TV appearances and speeches last week by Hollande, who is campaigning at full throttle for the two-round election on April 22 and May 6.
Socialist candidate, François Hollande, Outlines Manifesto for French Presidency Challenge
The Telegraph reports recently:
Promising to undo the Mr Sarkozy's legacy blow by blow, Mr Hollande said he would cancel 29 billion euros worth of tax breaks for the richest tranche of the population and big business but cut tax for small firms.
This, he confidently predicted, would allow him to balance the budget by 2017, while simultaneously creating 60,000 teaching jobs and 150,000 state-funded jobs for first-time workers as part of 20 billion euros in new spending.
The police and justice system would also get another 1,000 state sector jobs per year.
"All my measures are favourable to the middle classes," Mr Hollande claimed, while adding that the rich had it too good under Mr Sarkozy and a pre-crisis period of "crazy pay outs".
The wealthy should feel happy about paying extra taxes, he went on, saying: "I have faith in their spirit of civic duty and patriotism." He plans to introduce a new, higher rate of income tax for earners of more than 150,000 euros a year.
His manifesto speech in Paris came four days after the previously mild-mannered candidate dubbed "Mr Normal" delighted leftists by blasting "finance" as his chief adversary in his first major rally, which observers agreed has successfully bolstered his presidential stature.
And the Global Post reports:
Hollande, 57, is leading in opinion polls, aided by a recent strong showing in a primetime TV debate with foreign minister Alain Juppe, one of Sarkozy's most experienced cabinet members.
"This is a key moment for [Sarkozy] because it comes after a week that has been a very good one for Hollande," the news service quotes Brice Teinturier, deputy director at pollster Ipsos, as saying.
"Hollande has clearly retaken the offensive and above all he has disproved two of the UMP's criticisms of him: a lack of presidential character and weight, and having flabby proposals, because he's come up with 60 that are pretty precise."
Meanwhile, Hollande's recent declaration that his real adversary in the presidential campaign was not Sarkozy but the "world of finance" made the front page headline leftist French paper Liberation.