* Business confidence at crisis levels despite tax credit
* Firms finding scheme too complicated, doubt benefits
* PM seeks to dispel climate of mistrust among entrepreneurs
By Leigh Thomas
PARIS, April 18 The French government conceded
on Thursday that businesses have been slow to tap a tax scheme
billed as helping them compete for orders, create jobs and
revive the stalled economy.
Socialist President Francois Hollande has promised to
reverse the country's steady loss of business to foreign
competitors by bringing down labour costs, which have grown
faster than the euro zone average over the last decade.
The government hoped a tax credit scheme launched in
November would eventually save companies 20 billion euros ($26
billion) in wage costs annually, creating 300,000 jobs over five
years and boosting profit margins that are currently the lowest
in the currency bloc.
But six months after the plan was unveiled, Prime Minister
Jean-Marc Ayrault lamented that many companies still seemed
unfamiliar with it.
"It's not yet used widely enough," Ayrault told journalists,
following a review of progress in rolling out the package,
adding: "When it is used, it is very effective."
France's feeble economy is thwarting efforts to obey euro
zone debt rules while driving unemployment to a 13-year high of
10.6 percent, putting Hollande under conflicting pressure from
his European Union peers and from disillusioned voters.
The "competitiveness pact" has done little to keep business
confidence from plummeting to levels not seen since early 2009,
when companies were reeling from the global financial crisis.
Any company can apply for the tax credit scheme, which is
determined by the size of their wage bill and effectively cuts
labour costs by a few percent, enabling them to invest and
Ayrault brushed aside the idea, voiced by some business
consultants dealing with the process, that small firms can find
the application procedure for seeking tax credits too
CLIMATE OF MISTRUST
The scheme offers firms a tax credit equal to 4 percent of
their wage bill on salaries up to 2.5 times the minimum wage.
The credit will rise next year to six percent of the wage bill.
Although the programme will not come into full effect until
2014, it is being made available early to small and mid-sized
companies through state-backed advances signed with the public
investment bank BPI and traditional commercial banks.
Though the scheme is meant to benefit small and mid-sized
firms the most, 81 percent of the heads of such firms do not
expect it to affect their business, a TNS Sofres poll shows.
Some 430 million euros in advances have been extended or
approved so far and government officials say the pace is picking
up quickly enough to meet a target of 2 billion by mid year.
The tax credits have done little to corporate belief that s
Hollande's government is anti-business. Hollande imposed tax
hikes early in his mandate and more are likely next year.
Eager to recover business' trust, Ayrault insisted: "My
message to the risk-takers is that the government supports them
and will support them."
He said the government plans to use 1.5 billion euros in
household savings placed in state-regulated accounts over five
year to help finance small and mid-sized firms via injections of
capital, including 200 million euros in listed firms this year.
Louis Gallois, a former chief of aerospace group EADS and
author of a competitiveness audit the government based its
reforms on, said the important thing was to persevere.
"This is not going to be done in a day, it will take time,"
he said on RTL radio. "There are no miracle solutions."
($1 = 0.7643 euros)
(Reporting by Leigh Thomas; Editing by Catherine Bremer/Ruth