Pigeons cry fowl over French tax increases

Thu, Oct 4, 2012, 01:00

EVERYONE ELSE in France seems to have complained about the tough budget unveiled last week by president François Hollande’s government. Now it’s the turn of the pigeons.

A fast-growing group of internet activists calling themselves “les pigeons” – the bird is also slang for a mug or a sucker – has created a stir with its campaign on behalf of small-business owners badly hit by Mr Hollande’s tax rises.

The collective of start-up owners and other entrepreneurs has blitzed social media sites with a campaign arguing that they are playing the fall guys for France’s economic troubles. They reserve particular ire for the almost doubling of the rate of capital gains tax on the sale of businesses.

The movement was created by several French entrepreneurs following the publication of an opinion piece on the site of business newspaper La Tribune last Friday. The article, by the venture capitalist Jean-David Chamboredon, accused the government of “almost sadistic demotivation” and of “breaking dreams”.

The group has won support from some well-known French business leaders, among them telecoms billionaire Xavier Niel.

“The government thinks France’s entrepreneurs are pigeons,” the movement’s initiators wrote on a dedicated Facebook page. “Anti-economic policies are crushing entrepreneurial spirits and exposing France to a big risk.”

In the toughest French budget in 30 years, the government announced plans to reduce the deficit next year by raising an extra €20 billion through new taxes and a further €10 billion through spending cuts. It is also introducing a temporary 75 per cent tax rate on income over €1 million.

Mr Chamboredon said the capital gains tax changes would result in some cases in a rise in the effective marginal tax rate to as high as 60 per cent from 32 per cent for investors and entrepreneurs selling a company.

The tax increase would make France less attractive than neighbouring countries, said Mr Chamboredon, whose fund invests in technology sector start-ups. The European average rate is between 18 and 25 per cent, he said.

“It’s not a fair reward for risk and it’s going to push young entrepreneurs away, to London or elsewhere,” he said. “A 60 per cent tax rate practically means your company is being nationalised.”

Responding to the campaign, Fleur Pellerin, minister for digital industry and small businesses, said the budget contained measures to neutralise the effect of the higher marginal capital gains tax rates on start-ups. She was due to meet the “pigeons” to discuss their concerns.

Mr Hollande’s budget had already come under attack for its so-called millionaire tax last week from French soccer authorities, who said it would have a “disastrous effect” on the competitiveness of the sport in the country.

However, finance minister Pierre Moscovici said there was no sign of a massive fiscal exodus from France, as some business leaders had claimed.