French President Jacques Chirac said corporate taxes should be lowered to increase the country’s competitiveness. With a tax rate of about 33 percent, Chirac noted the levy in France is about 8 percentage points above the European average.
“The goal should be bringing it to 20 percent in five years” Chirac, whose second term ends in May, said in a speech to business leaders and union representatives in Paris yesterday.

France’s economic growth in 2006 lagged behind Germany’s for the first time since 1994 after a slump in exports pushed the trade deficit to a record and the weakness in industrial production reflected the loss of market shares suffered by french carmakers. In contrast to Germany, the world’s biggest exporter, France traditionally has relied on consumer spending for expansion.
“It would allow French companies to hire more”, Bernard Arnault, chairman of LVMH Moet Hennessy Louis Vuitton SA, said after attending the speech. “These are excellent ideas to explore”.
Jean-Claude Mailly, general secretary of union Force Ouvriere, said the proposal reflected “dangerous logic” because French companies “will never be as competitive as those that pay their workers less or don’t pay taxes at all”.
Chirac didn’t tell how to fund the cut in corporate tax rate. Not really surprising. Maybe Chirac is thinking of new taxes to fund tax cuts, since he appears unwilling to cut public expenses.