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

Photo: Getty
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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.