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France delays contentious overhaul of entrepreneur status
August 21, 2013 / 5:00 PM / 4 years ago

France delays contentious overhaul of entrepreneur status

PARIS (Reuters) - France’s government on Wednesday postponed a parliament debate on a draft law that curtails tax breaks and other advantages for small-scale entrepreneurs, angering business owners who say the delay creates legal confusion.

French Junior Minister of Crafts, Business and Tourism Sylvia Pinel (L) and French Minister for Veteran Affairs Kader Arif leave the weekly cabinet meeting at the Elysee Palace in Paris August 21, 2013 after a two-week summer holiday break. REUTERS/Benoit Tessier

The Socialist government says benefits for self-employed people under a special “auto-entrepreneur” status introduced by former president Nicolas Sarkozy have failed to spur enough of them to create fully fledged businesses and are open to abuse.

But the entrepreneurs have fought back against an attempt by Sylvia Pinel, minister for artisans, trade and tourism, to clamp down on their tax and administrative advantages, saying the scheme has helped many off welfare and into part-time work.

Many unemployed have found work thanks to the scheme, while other workers use it to supplement their income, such as teachers offering after-school tutoring. The scheme has also allowed low-skill workers such as house painters to declare work that previously was off the books.

The issue - thrust into the spotlight this year by an online pressure group - is the latest headache for a government whose focus on squeezing more tax out of the business sector has drawn frequent accusations that it is stifling entrepreneurship.

Pinel presented details of her bill at a cabinet meeting but said it would not be sent to parliament until January with a key clause - a lowered revenue threshold where the auto-entrepreneur scheme would cease to apply - still to be clarified.

French President Francois Hollande (R) escorts French Minister of Women's Rights and Spokesperson of the Government Najat Vallaud-Belkacem at the Elysee Palace in Paris August 21, 2013 after the weekly cabinet meeting. REUTERS/Benoit Tessier

“The government’s intent is not to eliminate the status but to correct it,” she told a news conference.

Under the scheme - which anybody can join and quit online with a few clicks - labour charges are paid only as earnings come in, rather than upfront as companies must do and business red tape is much lighter.

Pinel’s bill aims to lower the revenue threshold at which beneficiaries must exit the scheme and pay social charges like other businesses to 19,000 euros (£16,247) per year from 32,600 currently - the main point of contention for critics.

However, Pinel said the exact threshold would be debated in a parliamentary committee in September and then set by government decree - an unusual step. Normally, a draft law is sent to parliament shortly after being presented to the cabinet, rather than being delayed by several months.

“They are afraid of a scandal blowing up if they set the threshold now because the focus would be on that,” said Gregoire Leclercq, head of the French Auto-Entrepreneurs Federation.

“But we’re really getting discouraged at this point - the debate has been going on for 15 months already and now we’re going to lose five more months.”

Pinel has pursued the reform despite an online campaign by entrepreneurs calling themselves “The Chicks”, inspired by a group called “The Pigeons” that forced the government to exempt entrepreneurs from a rise in capital gains taxes.

Reporting by Nicholas Vinocur; Editing by Catherine Bremer and Alison Williams

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