Payroll Tax in France Is Almost Double That Paid in the UK, Complains a British CEO

“There is a great fear about taxes” [in France, said Ian Cheshire, the group chief executive of Kingfisher, a British do-it-yourself retail conglomerate]. Last year, Kingfisher paid €216 million in payroll tax on about 11,500 French workers. “That’s almost twice the amount we paid in Britain for the same number of employees,” he said.

Thus writes Liz Alderman in a front page article in the International New York Times.

President François Hollande of France has begun a major charm offensive to convince the world that France is open for business in a bid to lure back investments, which have slumped since he took office. 

Armed with pledges not to be overly taxing, he gathered nearly 40 chiefs of some of the world’s biggest multinational companies and investment funds on Monday under the gilded eaves of the Élysée Palace and told them that their money was not only welcome — it was sorely needed.

Mr. Hollande reiterated his pledge from last month to reduce by 30 billion euros, or $41 billion, the social charges that companies pay on their employees. But he went further on Monday, announcing plans to stabilize corporate tax rules, simplify customs procedures for imports and exports and introduce a tax break for foreign start-ups.

“I know that France is seen as a more complicated country than others,” Mr. Hollande told the leaders of General Electric, Volvo, Nestlé, Mars and others, as well as representatives of BlackRock and the sovereign investment funds of China, Qatar and Kuwait. The message, he added, is that “we aren’t afraid of opening ourselves up to the world.”

But it remains to be seen whether he can deliver those needed investments while burnishing an image tarnished by everything from high taxes to a labor dispute earlier this year in which employees at a Goodyear tire factory temporarily held their bosses captive. He has spooked investors by hewing to a populist agenda, including a proposal, now watered down, to impose a 75 percent marginal tax on the wealthy, and threats to nationalize companies to protect jobs.

Despite his new business-friendly promises, he still faces the hurdle of getting policy changes enacted into law over opposition from his fellow Socialists and other left-leaning politicians, who have successfully cowed him into retreat in the past. He must also persuade investors and multinational companies that France really is determined to change, after years of employers judging France to be an expensive and inflexible place to do business.

France “has everything it needs to succeed,” said Ernst Lemberger, an Austrian industrial investor who participated in the Monday meeting. “But still it’s been behind neighboring countries in taking the necessary economic reforms.”

 … after two years of rising unemployment and a languishing economy that has twice flirted with recession, the French president last month did a striking about-face with business, shifting his agenda and announcing a so-called responsibility pact to cut government spending and deliver a €30 billion reduction in the social taxes that support family benefits like day care.

 … Yet even as he talked to business leaders, the French Parliament began considering a law that would steeply fine companies trying to close operations the government deems economically viable.

 … In December, the heads of 50 French affiliates of foreign companies wrote an open letter to Mr. Hollande warning that it had become increasingly difficult to persuade their parent companies to invest more in the country.

“There is a threat hanging over France’s ability to attract foreign investment,” wrote officials from Microsoft, American Express, Xerox, Siemens, Unilever and others, which jointly employ about 150,000 workers in France. They cited the “penalizing” complexity and instability of the legislative and regulatory environment; a lack of flexibility in labor laws; high employer costs; and an overall “cultural mistrust” of the market economy.

 … A week earlier, it was Mr. Hollande who offered a gesture of reconciliation to French entrepreneurs, thousands of whom have left France for Silicon Valley, London, Hong Kong and other dynamic destinations.

After spending time in Washington, Mr. Hollande visited Silicon Valley. While there, he gave an American-style bear hug to the entrepreneur Carlos Diaz, who founded a group called “les Pigeons,” or the suckers, in 2012 to protest what they called Mr. Hollande’s “business-crushing” tax policies, including now-shelved proposals to double the capital gains tax for people selling their companies.

High taxes have generally been the sorest point for businesses. Ian Cheshire, the group chief executive of Kingfisher, a British do-it-yourself retail conglomerate, said on Monday that he would be ready to open 50 stores in France within five years, creating thousands of jobs, if he could be assured the tax regime would remain stable.