France: Sarkozy v Hollande on the economy

Francois Hollande Business people are taking what Francois Hollande says seriously as the next round of the election approaches

French President Nicolas Sarkozy takes on his Socialist rival Francois Hollande on 6 May.

The challenger is leading: Mr Sarkozy is the first incumbent since the Fifth Republic was founded in 1958 not to take first place in the first round of elections.

Meanwhile, Mr Hollande is bidding to become the first Socialist president in France in 17 years.

In January, ratings agency Standard and Poor's stripped France of its prestigious AAA rating, implying that it was no longer one of the safest places to invest.

Many are sceptical that France will be able to generate strong growth soon.

And France has not managed to balance its budget since 1976.

So how do Mr Sarkozy and Mr Hollande differ on their business and economic policies?

PUBLIC FINANCES

Sarkozy Hollande

Balance the budget by 2016

Also balance the budget, but by 2017. Get the deficit down to 3% - which meets European rules - by the end of 2013

Increase VAT by 1.6 percentage points to 21.2%

Raise CSG (a social security contribution not unlike National Insurance) by two percentage points on income from investments

Merge income tax and CSG, and increase that by 0.1 percentage points every year to fund pensions

Mr Sarkozy changed the retirement age to 62 in 2010, sparking mass protests

Reduce the retirement age back to 60 for those who started working at 18 and who have at least 41 years of contributions

BANK REFORMS

Sarkozy Hollande

A new financial tax of 0.1% on all shares bought. "We hope the tax will generate 1bn euros of new income and and thus cut our budget deficit," Mr Sarkozy said when proposing it in January

Implement a financial transactions tax, which will be used to help developing countries

Limit the bonuses that bank traders can get - without specifying by how much

Ban stock options and management bonuses

Increase capital gain taxes on banks to 15%

Separate investment and retail banks

Concentrate French financial aid for exporters of French products

JOBS AND TAX

Sarkozy Hollande

Mr Sarkozy is not in favour of increasing taxes on the richest

Two new higher tax rates, beginning with the headline-grabbing 75% tax rate on those with incomes above 1m euros

A new 45% tax band on people with annual incomes above 450,000

Lower unemployment payments over time for unemployed people

Make it mandatory for unemployed people to have re-training and accept jobs that are offered

Create 150,000 new "jobs of the future"

Adopt a global tax regime - as in the US and UK - whereby nationals pay income tax. So French nations would pay French taxes, regardless of where they are based

Target tax exiles in neighbouring countries like Switzerland and Luxembourg. Renegotiate the tax treaties with those nations

Restore a measure under former prime minister Michel Rocard that capped total income and wealth tax on an individual at 85%

IMMIGRATION

Sarkozy Hollande

Cut the number of legal migrants into France by half in the next five years

Debate annually in parliament how many workers should be let into France

EUROPE

Sarkozy Hollande

Mr Sarkozy had argued for eurobonds, which pool government debt across the eurozone, but seems to accept that they will not happen because of Germany's intransigence on the issue. It seems it is no longer part of his agenda

Renegotiate the fiscal pact that was signed by 25 of the 27 EU members to include:

  • the creation of eurobonds, which will be used to fund infrastructure projects,
  • a financial transactions tax,
  • using the European Investment Bank to invest in small business projects,
  • and re-allocating the current allotment of structural funds that go unused to other projects

Make it so that growth - as well as inflation - is part of the mandate of the European Central Bank

Include growth as one of the ECB's mandate but so that the central bank favours growth over inflation

Create a European investment bank for SMEs

Amend the Schengen zone - which allows passport-free travel among 23 European nations - to introduce measures to stop illegal immigration

If there is no serious progress made to amend Schengen in the next 12 months, then Mr Sarkozy says he will suspend the accord

Committed to equilibrium between the euro, dollar and yuan

Implement a Buy European Act in the same way the US has a Buy American Act introduced in 1933, which prioritises locally-made products for use in public projects

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