After yellow vest protests raged in the streets of Paris for 23 consecutive weeks, French President Emmanuel Macron has responded with a package of tax cuts and decentralizing political reforms. Macron unveiled the proposals at the Elysée presidential palace in the first domestic press conference of since he took office.
The gilet jaunes protests were named for the fluorescent yellow vests French motorists must wear when stopped at roadside; The New Republic likened the vests to “the armor of light” mentioned in Romans 13:12. Protests broke out last November over a proposed carbon tax hike and a government levy on diesel. Some protesters held signs that read, “Death to taxes” as they clogged traffic intersections.
Initially, Macron vowed he would“not change course, because the policy direction is right and necessary.” Though Macron relented and scrapped the carbon tax hike and increased the minimum wage by €100 ($113) a month, the protests morphed into a populist uprising against the self-described “Jupiterian” president. On Thursday a shriven president admitted his public persona is “always giving out orders, being hard, sometimes unfair,” before offering a package intended to assuage the movement well ahead of his possible 2022 re-election bid.
Here is what you need to know about his press conference:
Macron admitted the yellow vest protesters had ‘just’ concerns.
Macron has readily tied the movement to violence perpetrated by some of its fringe elements – a tactic he repeated on Thursday. However, he said Thursday that “I respect the yellow vests who came out into the streets at the beginning of this crisis.” Macron added that the protests reflected the nation’s “profound sense of fiscal, social, and provincial injustice,” and he did not want “the actions of some people eclipse the just demands that were … broadly supported.”
Macron offered $5.6 billion in tax cuts to the middle class.
Macron promised a combination of tax cuts totaling €5 billion (approximately $5.57 billion U.S.). The plan will “cut taxes for a maximum number of citizens and especially those who are working, the middle-class,” Macron said. Prime Minister Édouard Philippe added that a “great national debate” – which has garnered two million online comments and conducted 10,000 community meetings since January – “clearly shows us in which direction we need to go: we need to lower taxes and lower them faster.” Macron said the middle-class tax reductions would be offset by unspecified spending cuts, plugging corporate tax “loopholes,” and increased productivity.
A tax cut is overdue. Taxes consume a higher percentage of GDP in France than any other developed country, at 46 percent. There is room for spending cuts, since budget outlays take up 32 percent of French GDP – again, more than anywhere else in the OECD.
He defended his decision to abolish the wealth tax.
Macron stood by his decision to convert the nation’s wealth tax, the ISF, into a graduated national tax on real estate in 2017. “It was a reform to stimulate production, not a present for the rich,” he said. The wealth tax on those with €1.3 millionin assets, which socialist President François Mitterand introduced in 1982, imposed a net loss of €2.5 billion in 2017, according to Kedge Business School Professor Eric Pichet. Macron also placed a flat tax of 30 percent on capital gains – prompting Thomas Piketty to criticize the move publicly.
Macron, a former investment banker before becoming Finance Minister under his socialist predecessor François Hollande, understands the importance of investment capital and productivity for the sluggish French economy. (Hollande, by contrast, said, “My real adversary … is the world of finance.”)
But Macron said Thursday he would evaluate the policy next year. “It will be re-evaluated in 2020. If it’s not efficient, we’ll amend it,” he said.
Macron promised to increase productivity…without changing the work week or early retirement age.
“We must work more. I’ve said it before,” Macron said during his address. “France works much less than its neighbors.” However, he said he would not touch France’s 35-hour work week, nor its retirement age of 62. The Financial Times has speculated this will cause him to scale back national holidays.
Macron promised to decentralize power from elite Paris to the countryside.
The president also said he would devolve power from the capital to more remote cities and villages, which have seen a steady drain of jobs and resources. Chief among these reforms will be scaling back the policy of dirigisme, essentially a highly centralized form of government intervention in the economy, radiating outward – and downward – from Paris. If implemented, this reform would be a rare and welcome example of subsidiarity.
Macron also vowed to “guarantee the access for all to health services and guarantee that no school or hospital will be closed without the mayor’s approval.”
President Macron will close the nation’s Ivy League school for government bureaucrats, the ENA.
Macron promised to close France’s elite finishing school for politicians, the École Nationale d’Administration (ENA), which has become a symbol of the perpetuation of cronyism. Macron signaled last week that he wanted to offer “chances to all of our young people on the basis of merit and not their social or family origins.” A full 70 percent of ENA students have parents in the cadres, or prestigious executive positions. “This is not a meritocratic system anymore,” Macron said Thursday. “We don’t need job-for-life protection.”
The nation’s free market advocates supported the reform, with caveats. “Yes, the removal of the ENA is a good measure, provided that the new administrative elites are trained and recruited differently,” wrote Agnès Verdier-Molinié, director of the think tank Fondation iFRAP, in Le Figaro. “France struggles to reform itself, because big [institutions] and unions almost always block” needed reforms.
Macron promised greater use of the civilian referendum and structural reform for Parliament.
President Macron wants to designate approximately one-fifth of Parliament seats to be elected by proportional representation, instead of a winner-take-all system like that of the United States. He said this will give greater representation to minority parties.
He also promised a greater role for citizens to call a referendum. But with an apparent eye on Brexit, he added, “I don’t believe in permanent referendums, because referendums don’t allow for difficult decisions at the time when they must be made.”
Macron promised to crack down on ‘political Islam.’
Macron singled out “political Islam” as the origin of “clannishness that has crept into some neighborhoods.” In those areas, some clerics, “in the name of religion, are pursuing a political project that wants to secede from our republic.”
Macron also proposed greater control of European borders.
Macron called on European nations to do a better job stopping illegal migration into the EU. “On the European level, we decided to have common borders,” he said. “It’s not working anymore.”
“To be welcoming, you need to have a house. So, we need borders,” he said. “We need borders to be respected. We need rules.”
Macron said that nations that refuse to enforce the EU’s border – and nations such as Hungary and Poland, which refuse to acceptthe quota of Middle Eastern migrants apportioned by Brussels – should be expelled from the Schengen area. “This is the basis upon which Schengen should be overhauled, even if it means having fewer states within Schengen,” he said.
How have the French people responded?
A poll found that 63 percent of the French public found themselves unconvinced by the conference, and only seven percent said Macron’s plans were “very convincing.” Les Républicains leader Laurent Wauquiez said the initiatives amounted to “marginal adjustments.” Socialist Party leader Oliver Faure called Macron’s “response small.” And Fondation iFRAP called his proposals a “poor harvest.”
Macron did not promise to run for re-election in 2022.
Macron, 41, is one of the most ambitious leaders in Europe. But after being swept into power in an historic election (over the massively unpopular National Front), his poll numbers have remained mired in the 20s or 30s, and both of his most recent predecessors have served only one term. He did not directly answer whether he will seek a second term, although there is little doubt about his intentions.
Macron misidentified the essence of French character.
“We are above all children of the Enlightenment. And it is from these debates, these deliberations, this capacity to contradict one another … that good solutions can emerge for the country,” Macron said in his address. “The art of being French is being rooted and universal, attached to history and origins but embracing the future.”
There seems to be something missing from his description of a nation once known as “the eldest daughter of the Catholic Church.”
Ironically, Macron had to postpone his speech one week, because the Notre Dame Cathedral fire broke out the morning that he was scheduled to give it. Apparently, even its smoldering ruins cannot draw Macron’s attention to the importance of faith to his country and to Europe as a whole.
French speakers can watch the press conference here.
(Photo credit: Shutterstock.com.)