Anxious to kick-start talks on a reform of corporation tax, the President of the French employers’ federation Medef, has called on the Government to lower the corporate social solidarity contribution (C3S) together with the headline rate of corporation tax.
Reducing the social solidarity contribution will ease the burden on production, while lowering the corporate tax rate to between 25 and 28 percent will benefit all companies. Both measures would need to be implemented in equal measure to maintain balance in the tax system.
The C3S contribution is currently levied at a rate of 0.16 percent on annual turnover in excess of EUR760,000 (USD1m). The charge was introduced in France in 2005 to finance the social protection of self-employed workers.
Medef also considers that the Government should quickly divulge details of its plans to cut the cost of labor, beyond the tax relief provided through the CICE tax credit for competitiveness and employment. Employers are seeking a labor tax cut on all wages, not just on low salaries.
The CICE tax credit was introduced in France in 2013. This year, the mechanism will provide tax relief to employers worth around EUR20bn. It amounts to 6 percent of gross payroll for remuneration equal to or below 2.5 times the minimum wage. The Government has pledged to lower the cost of labor by a further EUR10bn by 2017, within the framework of its competitiveness pact.
