Sarkozy agrees Tobin tax and labour reform

FRANCE will forge ahead with its own Tobin tax in August, French president Nicolas Sarkozy declared yesterday in an attempt to boost his flagging poll ratings.

The tax will be levied at 0.1 per cent on all financial transactions, he said, although he did not specify exactly what asset types it will capture.

In an hour-long TV broadcast, Sarkozy also outlined German-style labour reforms that he said were needed to boost productivity and allow French workers to compete.

The measures include allowing more employees to be pushed onto part-time work and lifting the 35-hour limit on working week, which he said is damaging to France’s productivity.

Sarkozy also announced a 1.6 per cent VAT hike to 21.5 per cent in order to pay for a €13bn (£10.9bn) cut in national insurance tax.

“We have to lighten the cost of work. I’m not talking about reducing salaries, I’m talking about employment charges that penalise employment,” said Sarkozy.

In an echo of similar measures announced this side of the channel, the French president added that he would boost the number of apprenticeships and establish a bank to invest in national industries.

“I want France to remain a land of production,” he said, adding that the UK, by contrast, has “no industry”.

The centre-right president is fighting to make up what has at times been a 20-point poll lead by his socialist rival Francois Hollande, who has also promised to introduce a Tobin tax. Hollande’s lead was put at 12 per cent by a recent poll.

Sarkozy is also facing an outside challenge from Marine Le Pen, daughter of the extreme nationalist Jean-Marie Le Pen, who has gained ground in recent months.