LAppetite comes with eating. That of the Medef has become insatiable. By placing his return under the sign of discontent against corporate taxation, Patrick Martin, the new boss of bosses, engages in a fight that is more Pavlovian reflex than pragmatism to take into account the economic context that France is going through. During the university of the employers’ organization, on August 28 and 29, its president described as “bad signal” the government’s decision to extend until 2027 the reduction of 4 billion euros in the contribution on the added value of companies (CVAE) which should have taken place in one go in 2024.
Medef’s disappointment is understandable. But the government is placed in the same situation as a business leader, who must adapt to circumstances and calibrate his strategy according to his room for manoeuvre. However, these are increasingly constrained. Between the slowdown in growth and the rise in interest rates, respecting the budgetary trajectory to meet our European commitments is becoming complicated. In this period of lean cows, tax cuts not financed by a reduction in expenditure are difficult to justify. While employers are worried about the state of our public finances, a little consistency would not hurt.
A posture game
Criticism from Medef is all the more inappropriate since, since 2017, companies have not had to complain about Emmanuel Macron’s policy. Over the period, their taxes fell overall by 30 billion euros. The rate of income tax has thus fallen from 33.3% to 25%. An unprecedented effort in France. As for production taxes, such as the CVAE, companies have already benefited from a reduction of 15 billion euros.
This supply policy has borne fruit by helping to restore some of the lag in competitiveness accumulated by France since the end of the 1990s. The country’s attractiveness has recovered, there is now a net balance of factory openings, and unemployment fell in an unprecedented way. But, given the darkening economic outlook, the government is right to ease off on tax cuts.
The bad mood of the Medef is probably due to a game of posture. The new president of the organization is thus trying to establish his authority by showing that he is not towed by a government policy which, in any case, in the eyes of its members, will never be sufficiently “pro- business”.
The employers would however gain in credibility by knowing how to show discernment, and above all patience. Because the government does not renounce these tax reductions, it shifts them in time. This delay should also be an opportunity to obtain compensation from the Medef. The organization is particularly awaited on two subjects. The pension reform requires companies to finally tackle the management of career endings. Inflation exacerbates tensions around low wages and career paths. It is urgent to find ways to unblock the current system.
This will be one of the major themes of the social conference promised on August 31 by Emmanuel Macron at the end of the summit with the leaders of the political parties. This meeting could be an opportunity for the Medef to prove that it is a responsible social partner, and not just a recording chamber for the demands of its members.