French President Nicolas Sarkozy takes to the airwaves Sunday to unveil reforms aimed at lifting France out of the economic doldrums and boosting his credibility ahead of elections he is tipped to lose to a Socialist. The hour-long television interview to be broadcast on six different stations Sunday evening comes two weeks after France humiliatingly lost its top triple-A credit rating. The downgrade by Standard and Poor’s added to already bleak economic figures for France — with recession looming and nearly three million people out of work — and dealt a severe blow to Sarkozy’s hopes of hanging on to his job. The right-wing leader was set to announce tax rises, including a hike of 1.6 percentage points in value-added sales tax on goods and services, in Sunday’s broadcast at 1915 GMT, officials said.
The German-inspired “social tax” aims to shift the burden of paying for social security from employers to consumers and thus create more jobs while also making French firms more competitive. The president was also expected to provide details of a controversial new tax on financial transactions he hopes will be adopted across the European Union after he introduces it in France. Sarkozy’s television appearance comes a week after the Socialists’ presidential candidate Francois Hollande launched his campaign with a blistering attack on “the world of finance.”
He later outlined his plans to reverse Sarkozy’s legacy, promising 20 billion euros ($26 billion) in new spending by 2017, the creation of 60,000 new teaching jobs and 150,000 state-subsidised new jobs for young workers. An opinion poll this week said Hollande would in the second round of the election in May take 56 percent of the votes, with Sarkozy scoring 44 percent. Sarkozy, who celebrated his 57th birthday on Saturday, had staked his re-election bid on convincing voters that he was the only candidate with the stature and experience to save France from economic meltdown. He reportedly told allies last month: “If we lose the triple-A (credit rating), I’m dead.” Sarkozy, who is almost universally expected to stand for re-election despite not yet having officially said that he will, justified pushing through two austerity packages as necessary to defend France’s triple-A rating.
He was set Sunday to explain that his planned increase in value-added tax would be matched by a decrease in employers’ payroll contributions, thus helping them compete with producers in lower income economies and boosting French exports. Other taxes affected cover revenue from investments and property. Sarkozy said in an end-of-year address that social charges “should not weigh principally on labour, which is so easy to outsource. We should reduce pressure on jobs and seek a contribution from imports, which compete with our products through low labour costs.”
But some economists warn against the reform, which they say would hit domestic consumer demand, the main motor of the flat-lining French economy. And Hollande has said he would not enact the measure, even though some of his supporters have championed it in the past. Members of Sarkozy’s own UMP party also fear it could lose him votes. A previous attempt to introduce the measure at the beginning of his five-year term is blamed for the loss of dozens of UMP seats in 2007 parliamentary elections.
