French white-collar workers stir up tax revolt against Mitterrand
Paris — Even in a nation accustomed to demonstrations, it was an unusual sight: some 30,000 marchers wearing ties and jackets, not jeans, and jamming one of the city's most comfortable neighborhoods, not the student quarter.
''Lower taxes, more work,'' the banners declared.
The uncharacteristic anger this week of France's white-collar workers was provoked by the Socialist government's latest turn of the austerity screw. In the recently released 1984 budget, government spending is being held to the smallest increase in 13 years and a surcharge of up to 8 percent on middle-to-high income taxpayers is being imposed.
As economically necessary as these moves may be to lower inflation and reduce the trade deficit, they have put the government in a difficult political situation. In addition to the demonstrations, planned this week throughout the country, President Francois Mitterrand's leftist coalition has come out losers in two recent elections: last week in the largely symbolic Senate, and this week in a mayoral by-election in a traditionally Communist northern Paris suburb.
What has hurt the government most are the increased taxes, which have brought rates up almost to Scandinavian levels. White-collar demonstrators are talking of an outright tax revolt.
Said demonstrator Claude Stevens, a mid-level executive with an electronics firm, ''I never thought of demonstrating before. Demonstrating is something for students. But my taxes have gone up close to 20 percent in two years under the Socialists and I've had enough.''
Many Socialists and Communists are also fuming. Despite the exclusion of low-income Frenchmen from the new taxes, they worry that skilled industrial workers will also be hit hard.
The discontent ends nearly a quarter century of quiet about taxation. Ever since small shopkeeper leader Pierre Poujade led a tax revolt during the 1950s, governments have kept the peace by relying on indirect taxation.
A total tax bite that was as heavy as most European countries was partially hidden by a stiff sales tax that brought in about 40 percent of revenues. A low income tax raised only about 20 percent.
The Socialists have made taxes much more visible. Immediately after taking power, they introduced a wealth tax, increased welfare contributions, and raised the medium-income tax rate.
They have now gone much further. Indirect taxes were increased last spring with the imposition of a special levy on tobacco and alcoholic drinks. But with the special surcharge and a previously imposed 1 percent forced loan on taxable income, direct taxes have been raised most.
The new taxes are designed to keep the budget deficit at 3 percent of GNP, a figure the government sees as crucial if its austerity program is to succeed. Austerity has already brought inflation down and cut deeply into the country's trade deficit, causing increased respect among economists for Mitterrand's helmsmanship.
It's ''impressive,'' said J. Paul Horne, chief European economist for Smith, Barney, Harris, Upham and Co. ''No conservative government would be so tough.''
But some economists now fear that taxes have reached a threshold beyond which they will spur traditionally tax-dodging Frenchmen to new lengths. Even Mr. Mitterrand has acknowledged that the government's take has reached an ''unacceptable'' level.
Mr. Mitterrand has promised to lower taxes in 1985. But with government spending already pruned, economists point out he will only be able to keep this pledge if the economy starts to recover - something many of them doubt will happen soon.