Start ups and small businesses face tough future

THE shake out of François Hollande's budget for 2013 has seen many smaller business owners question his motives following the announcement of two tax changes.

The first involves the creation of a 60% capital gains tax on successful entrepreneurs who sell their business, despite many having spent years to build it up and offer employment to others.

The fear is that such a punitive tax rate will kill any appeal of investing in small start-up businesses if people face handing over such a large of proportion of their success.

On the Rude Baguette website, a news site for start-ups in France, it highlights the Pigeon Movement which is using Facebook and Twitter to mobilise protests against the measure.

A second tax change looks set to hit the auto-entrepreneur status for small businesses, the system I am currently registered under.

It involves the end of the fixed rate of taxation and a move to the estimated rates that exist in the alternative regimes aimed at businesses.

The problem with this set up was that in the earliest years of a start up business they faced expensive social charges, that cut deep into any income earned and was one of the main issues that the auto-entrepreneur system hoped to deal with.

The man behind the auto-entrepreneur regulations which came into effect in 2009, Hervé Novelli, says the changes are an attack on poorer workers.

And this would seem to be backed up by the figures, with a recent report showing that nine out of ten auto-entrepreneurs earn less than the minimum wage.

All this comes as protests took place in Paris on Sunday against the EU fiscal pact, unemployment in France now stands at over three million and the country's industrial sector had a bleak September, shrinking at its fastest pace in three and a half years.

Update: Consultation on auto-entrepreneur scheme to take place

Comments

[Alex]

This is something I find difficult to understand about France. Auto-entrepreneur offered, to my mind, a way of getting people to pay tax who were previously on the Black. Leading to increased income for the Government. Smacking people with massive cotisations is just going to drive them out of business where they become a drain on the country, rather than a contributor. Then they'll have to go back to cash work.

I realised it's hard for MPs earning over €11K a month (net including expenses) to understand, but their income has to come from somewhere. Not everyone can be a fonctionnaire with a good salary, guaranteed pay rises and great pension. The figures don't add up.

[Jo Harrison]

Really bad news, I'd have to consider moving back to the UK if this happens, I'm working really hard and won't see any benefit!!

[Craig McGinty]

Thanks for the comments, and I must admit I am really struggling with why the government thinks this is a way forward. Driving people to work on the black, take up state handouts or deeper into debt seems a very backward step. I only hope that any proposed change is limited.