U.S. News

French Tax Breaks for Overtime Pay to Cost Up to 3 Billion Euros


The French government's plan to exempt workers and businesses from taxes on overtime pay to stimulate the economy will cost 2.5 billion euros to 3 billion euros ($3.38 billion to $4.06 billion), Prime Minister Francois Fillon said Wednesday.

The plan, championed by conservative President Nicolas Sarkozy in his election campaign, is part of his effort to get the French working beyond the 35-hour workweek introduced by a Socialist government in 1999.

Fillon will present the plan Wednesday to the Council of State and to the state health care authority. He said on RTL radio that it would cost up to 3 billion euros, but noted that the final cost would depend on how many workers and businesses decide to take advantage of it.

French media have estimated that it would cost the budget closer to 5 billion euros.

Opposition leftists are strongly opposed to the idea, arguing that it goes against France's worker protection laws and would deprive the state health care system of necessary funds.

The idea is to encourage workers to work longer hours to boost productivity but without increasing the tax burden on employees.

"We believe that more working hours means more growth, and therefore more wealth. This measure is destined to respond to two principal problems of French society ... insufficient purchasing power and shortage of hours worked," he said.