Social VAT: Battle of figures on job creation
Dispute between experts around the social VAT. Valérie Pécresse, the budget minister, expects the measure to create 75,000 to 120,000 jobs. Nicole Bricq, the rapporteur of the PS budget to the Senate, believes that the decline in employer contributions, coupled with recovery of 19.6% to 21.2% VAT and the rise of the CSG on savings, will at best 30,000 jobs. And, at worst, destroy 40,000. The Senator had to defend its position in the Senate Wednesday night, when reviewing the draft supplementary budget including introducing VAT and social tax on financial transactions. A review which promised rapid, left, majority, having decided to reject the text of a block rather than amend the clause by clause.
To achieve these numbers, Nicole Bricq reasoning in two steps. She said the VAT increase will cause a price increase of 0.5% to 0.7%. This additional inflation weigh on consumer spending, resulting in the destruction of 120,000 positions. Meanwhile, the decline in employer contributions will create between 80,000 and 150,000 jobs. Hence a total balance disappointing.
"The cuts decided by the Government target salaries between 1.6 and 2.1 minimum wage, so skilled workers. Companies hire these workers when they need their expertise. The issue of cost is secondary. As a result, reductions have little incentive effect on the hiring decision, "Nicole Bricq reasons. She said it was to hire unskilled workers that cuts costs may have a strong effect.
A Keynesian model dated
At Bercy, an estimated economic models selected in previous official reports, listed by Nicole Bricq, are based on reasoning "Keynesian" obsolete, making the consumer the only engine of growth possible. The government counters that it is precisely to encourage competitiveness and thus growth in exports.
The executive wanted to target anyway wages very practiced in the industry, in order to reduce labor costs. Nicole Bricq replied that the loss of competitiveness of French industry does not come from labor costs but an innovation problem. That's why she regrets that the capital budget for the future, focusing on research, has been punctured billion to mount the store industry.
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