Friday, 16 August 2013

Friday, 16 August 2013

Wake up Hollande !

Politicians are rarely popular individuals. They have a really tough job, and they cannot please everyone with the difficult decisions that they face. Added to that, the financial situation experienced over the last 5 plus years have made time harder than ever.

However, France seems to be suffering more than is necessary under the leadership, if that is the correct word, of François Hollande. The self styled "Mr Ordinary" changes his policies almost as often as his underware, presumably as his aides highlight one problem and then another.

I read recently that France remains the No 1 tourist destination in the world, yet again, but instead of capitalising on this marvellous opportunity to kick start an economy, France remains France, and is well down the list of Euros / £s spent per person on holiday. Why ?

Because France refuses to wake up to life in the C21st. Recently, I have seen restaurants in tourist areas, closed for 3 weeks for their annual holiday, at precisely the time when they could be ringing the cash tills if they had a clue about marketing.

No attempt is made to entice holidaymakers to dig into their wallets, you just cannot imagine this happening in the UK or across the Atlantic in the US. Tourism is a great opportunity to start to grease the cogs of a country's economy, but here is an opportunity being wasted.

It is really hard to believe that "entrepreneur" is a French word. Entrepreneurial spirit is characterised by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly global marketplace. Successive French governments have done seemingly everything in their power to suppress this Entrepreneurial spirit. the sole exception has been the creation of the Auto entepreneur scheme. This is a simplified version of an existing small business set-up, the micro-entreprise, which requires a turnover below certain thresholds.

It is intended to give those starting a business an easier way to set up, pay taxes and social security charges. Auto-entrepreneurs are exempt from registering with the chambre de métiers or the chambre de commerce et d’industrie, which saves time and money. However, instead of encouraging people down this route, the Government is closing opportunities and moving the goalposts, creating confusion and a lack of confidence.

The same sort of confusion reigns in the property world - with the rules for Capital Gains Tax having been changed several times in the brief period that Hollande has been in power. Originally the time limit for CGT calculations was a 15 year period of ownership, after which the proceeds were tax free. Since then, the period has been increased to 30 years, and more recently changed again to 22 years. In addition, social charges have been levied against UK owners, which may yet get a challenge in an EU courts, as it is not technically legal. No clear guidelines are in place for the present regime, leading to uncertainty.

If there is one thing that markets hate - it is uncertainty. So France is missing another trick here, because it could also use the housing market to kick start it's economy. When people start moving house, they also start spending money, and these cogs grease more cogs, and stimulate other areas of the economy.

I don't think that Hollande has yet worked out that this means more revenue, (in the form of increased taxes). he certainly didn't when he introduced his 75% income tax regime and a list of high profile celebrities announced that they would be quitting France. He hasn't worked out that a certain % of x is better than 100% of nothing. Wake up please M Hollande.................

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