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French Socialist government blocks tax evasion measure in midnight revote

Finance minister Michel Sapin claims French companies would be undermined by the proposed tax evasion move
Finance minister Michel Sapin claims French companies would be undermined by the proposed tax evasion move Reuters/Charles Platiau
3 min

France's Socialist government hauled MPs out of bed to attend a late-night parliamentary session this week so they could vote down an anti-tax avoidance measure. They also voted against a move to make a reduction of the VAT rate on online news outlets retroactive, leading to accusations that they are persecuting a website that has broken several political scandals.

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Fighting tax evasion is supposed to be a top priority for the government but this week it opposed an amendment to the budget that would force companies to publish full details of their activities in all countries where they operate.

Nevertheless, the lower house of the French parliament, the National Assembly, backed the move on 4 December thanks to the votes of Greens, hard-left MPs and some dissident Socialists.

It was defeated when it reached the upper house, the Senate, which is controlled by the right.

So it went back to the National Assembly, which has the right to overturn a Senate decision, which it did by 28 votes to 24, enraging Budget Minister Christian Eckert, who demanded a suspension of the session.

The 10-minute suspension turned into 40 minutes, by which time, according to three NGOs who have issued a joint statement slamming the "manoeuvre", the government had put pressure on Socialist MPs who voted against the government line and hauled others from their beds to come and vote.

In a second vote, taken at 1.30am, the amendment was rejected by 25 to 21.

The measure would have forced companies to declare their turnover, profit, number of employees and tax payments in every country where they have a subsidiary, so as to prevent them declaring profits made in France in tax havens.

The government says it does not oppose collecting the information but does oppose making it public, arguing that it would undermine the competitivity of French companies.

Bad news for online news sites

The MPs were less generous to online news sites.

By 40 votes to 22 they rejected an amendment to the revised 2015 budget that would make retroactive a move to reduce the VAT they pay from 19.6 per cent to 2.1 per cent, the level already paid by the written press.

The director of the Mediapart website, Edwy Plenel, slammed the decision as a "low blow from a government that is blind to the digital revolution and the pluralism of the press".

Mediapart, which forced the resignation of then-budget minister Jérôme Cahuzac by revealing that he had a secret Swiss bank account and has also published several scoops on former president Nicolas Sarkozy, was recently served a bill for 4.1 million back taxes and could be forced to close.

The Senate blocked the budget again on Wednesday because MPs had rejected several proposed tax cuts, mainly for businesses, sending it back to the National Assembly, which passed it on Thursday.

France netted a record 19.3 billion euros from tax evaders in 2014, largely because of whistleblowers who revealed details of tax dodging in Switzerland and Luxembourg.

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