Hollande’s party set to scrap French tax break on overtime

Julian Harris
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TAX breaks on overtime in France are set to be scrapped by new President Francois Hollande’s socialist government, it announced yesterday.

The decision to reverse the policy, which was introduced by former President Nicolas Sarkozy, is being taken under the belief that it will create jobs.

Prime Minister Jean-Marc Ayrault argues that the measure disincentivises firms from creating new jobs because each extra hour of overtime is taxed less than each hour worked by a new employee.

His views clashed markedly with those of the former administration, which brought in the tax breaks as part of a bid to allow hard working French people to be rewarded for their efforts.

Former Prime Minister Francois Fillion lashed out at the socialists’ reversal of the policy, yesterday.

“It’s making an economy that is already the most rigid of all European economies even more rigid, the opposite of what we should be doing in a time of crisis,” Fillion said.

Yet the government is likely to go through with the plans, arguing that the hike will cut the deficit.