Hollande forced into U-turn after France's "Pigeons" swoop on tax plan

Atlas shrugs in France, and wins.

François Hollande was pressured into reneging on a highly unpopular tax bill on Thursday after fiscal changes outlined in the 2013 budget provoked uproar amongst France’s entrepreneurial sector.

The climb-down came after a viral barrage launched by a group of web entrepreneurs calling themselves ‘Les Pigeons’ (French slang for ‘chumps’). The movement has garnered a significant wave of support, with almost 63,000 members on Facebook alone and the hashtag #geonpi trending worldwide on Twitter.

At present, French entrepreneurs pay 19 per cent capital gains tax (plus 15.5 per cent in social security contributions). New measures announced in the September 28th budget pledged to bring capital tax in line with income tax, meaning that start-ups that take in over €150,000 annually (most of them) would be forced to pay a whopping 45 per cent in capital gains tax, practically double the current amount. When added to the mandatory 15.5 per cent in social contributions, the total tax rate clocks in at a staggering 60 per cent.

To put that into perspective, the average European capital gains tax lies somewhere between 18 and 25 per cent, with maximum rates set in the UK (28 per cent) and Germany (26.4 per cent).

"Les Pigeons" protest that such shifts in the country’s fiscal policy are unfairly skewed against the startup community. Commentators warn that such tax increases could decapitate France’s entrepreneurial base, choking innovation and rendering small businesses creation almost entirely untenable.

Crucially, Hollande’s decision to introduce such exorbitant tax hikes represents a fundamental backtrack on earlier campaign pledges to re-balance taxes in favour of startups, leaving many entrepreneurs asking themselves if they still have a future in France.

“The government thinks France’s entrepreneurs are pigeons”, the movement’s Facebook page declares. “Anti-economic policies are crushing the entrepreneurial spirit and exposing France to a big risk”.

The formidable lobbying force of the ‘Pigeons’ movement led to finance minister, Pierre Moscovici, setting up emergency talks with entrepreneurs last Thursday to negotiate changes to the tax bill.

“We don’t want to give the impression that we want to punish the Pigeons”, a Hollande representative told Reuters. “We’ll find a solution … the Pigeons should return to their nest”.

However, despite the climb-down, Hollande has set a dangerous precedent. By alienating France’s thriving entrepreneurial community, he runs the risk of squandering the sector’s promising economic potential. A study of 108 French SMEs revealed a drastic 33 per cent growth in revenue from €753m in 2010 to €1bn in 2011. These impressive growth rates ran parallel to a 24 per cent increase in employment figures, with most workers employed under a CDI contract - the strongest of its type in France.

The decision to saddle such a burgeoning sector with a salvo of taxes seems confusing at a time when many of country’s larger corporations find themselves struggling to remain competitive. Peugeot and Bouygues have already laid off thousands this summer and the mood in the French business community is souring. Hollande is alienating small business precisely when he needs them to drive growth.

Such economic oversight comes at a bad time for Hollande. With unemployment at a 13-year high and 2013 growth forecasted at shocking -0.2 per cent, Hollande’s perceived pursuit of an anti-capitalist, anti-economic agenda won’t do him any favours - especially if he is to fulfill his election promise to hoist the French economy back on its feet.

Concerns are rising in France that the government’s strident model of budgetary rigour is simply incompatible with nurturing a flourishing entrepreneurial sector.

For François, the Honeymoon has ended abruptly. And with his approval rating plummeting from 56 to 41 per cent since his inauguration, he needs all the friends he can get.

François Hollande. Photo: Parti Socialiste

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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What is the Scottish Six and why are people getting so upset about it?

The BBC is launching a new Scottish-produced TV channel. And it's already causing a stooshie. 

At first glance, it should be brilliant news. The BBC’s director general Tony Hall has unveiled a new TV channel for Scotland, due to start broadcasting in 2018. 

It will be called BBC Scotland (a label that already exists, confusingly), and means the creation of 80 new journalism jobs – a boon at a time when the traditional news industry is floundering. While the details are yet to be finalised, it means that a Scottish watcher will be able to turn on the TV at 7pm and flick to a Scottish-produced channel. Crucially, it will have a flagship news programme at 9pm.

The BBC is pumping £19m into the channel and digital developments, as well as another £1.2m for BBC Alba (Scotland’s Gaelic language channel). What’s not to like? 

One thing in particular, according to the Scottish National Party. The announcement of a 9pm news show effectively kills the idea of replacing News at Six. 

Leading the charge for “a Scottish Six” is John Nicolson, the party’s Westminster spokesman for culture, media and sport. A former BBC presenter himself, Nicolson has tried to frame the debate as a practical one. 

“Look at the running order this week,” he told the Today programme:

“You’ll see that the BBC network six o’clock news repeatedly runs leading on an English transport story, an English health story, an English education story. 

“That’s right and proper because of the majority of audience in the UK are English, so absolutely reasonable that English people should want to see and hear English news, but equally reasonable that Scottish people should not want to listen to English news.”

The SNP’s opponents think they spy fake nationalist outrage. The Scottish Conservatives shadow culture secretary Jackson Carlaw declared: “Only they, with their inherent and serial grievance agenda, could find fault with this.” 

The critics have a point. The BBC has become a favourite punch bag for cybernats. It has been accused of everything from doctored editing during the independence referendum to shrinking Scotland on the weather map

Meanwhile, the SNP’s claim to want more coverage of Scottish policies seems rather hollow at a time when at least one journalist claims the party is trying to silence him

As for the BBC, it says the main reason for not scrapping News at Six is simply that it is popular in Scotland already. 

But if the SNP is playing it up, there is no doubt that TV schedules can be annoying north of the border. When I was a kid, at a time when #indyref was only a twinkle in Alex Salmond’s eye, one of my main grievances was that children’s TV was all scheduled to match the English holidays. I’ve migrated to London and BBC iPlayer, but I do feel truly sorry for anyone in Glasgow who has lost half an hour to hearing about Southern Railways. 

Then there's the fact that the Scottish government could do with more scrutiny. 

“I’m at odds with most Labour folk on this, as I’ve long been a strong supporter of a Scottish Six,” Duncan Hothershall, who edits the Scottish website Labour Hame. “I think the lack of a Scotland-centred but internationally focused news programme is one of the factors that has allowed SNP ministers to avoid responsibility for failures.”

Still, he’s not about to complain if that scrutiny happens at nine o’clock instead: “I think the news this morning of a new evening channel with a one hour news programme exactly as the Scottish Six was envisaged is enormously good news.”

Let the reporting begin. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.