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French report
by Euro Reporter
2013-10-30 09:40:50
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Couple arrested after child found in car boot

French investigators are trying to unravel the harrowing case of a girl who was found in the boot of a car and who might have been hidden there since birth. A mechanic discovered the naked, malnourished and dehydrated child aged between 15 and 23 months on Friday while the car was at a garage in Terrasson, Corrèze, central France.

The garage workers told TF1 television that a woman in her 40s brought a Peugeot estate car in for a basic repair that involved changing a part. When the workers heard scratching and moaning from the boot, they asked the woman if she had a dog or cat in there. She said the noise was probably a child's electronic toy that had switched itself on. A mechanic opened the boot and found a naked child lying on bin bags amid excrement, "gasping for air". The mechanic said the smell was overwhelming and the child seemed "dehydrated, very, very dirty and feverish".

Hospital tests on the child showed significant developmental problems and delayed growth. Investigators are trying to establish whether the girl, whose birth was never registered, has been kept hidden from the mother's partner and three other children in order to conceal her existence since birth. It is not clear how long the child might have been kept in the car boot. The girl's mother, aged 45, and her 40-year-old partner, both of Portuguese origin and unemployed, live in a village near the garage. They were arrested and charged on Sunday with child abuse and endangering a minor, before being bailed. Their three other children aged between four and 10 were taken into care. The girl remains in hospital undergoing treatment while the police investigation continues.


France may be losing its appetite for taxes

Robin Hood came from Nottingham, England, but the tax named in his honour is much more popular in France. The so-called Robin Hood Tax—or Financial Transaction Tax, to give it its proper name—is a levy of 0.1% on all stock and bond trades, and 0.01% on all derivative trades. The proceeds would be placed in a fund to pay for future bank rescues, so taxpayers are no longer on the hook if a big bank fails. (In this sense, it is not about taking from the rich to give to the poor, Robin Hood-style, but taking the from rich in order to avoid taking from the poor.) There are 11 countries in the EU, including France, that has signed up to the tax, which was due to take effect next year. But stiff opposition from the financial industry and a legal challenge by the UK will delay the tax, if it happens at all. Growing opposition within France, one of the tax’s biggest supporters in the past, is now threatening to derail the proposal.

Christian Noyer, governor of France’s central bank, called the tax a “non-starter” in an interview with the Financial Times yesterday. He said it could “trigger the destruction of entire sections of the French financial industry, trigger a massive offshoring of jobs and so damage the economy as a whole.” French president François Hollande rode to power in 2012 on a pledge of “fiscal justice,” which featured Robin Hood-inspired tax hikes on the richest individuals and institutions. But the French public’s appetite for ever-higher taxes is waning, pushing Hollande’s approval rating to historic lows. France’s socialist government is no friend of the financial industry, but when it imposed a national transactions tax last year, it was watered down to apply only to shares of the country’s largest listed companies.

A Robin Hood Tax works best when it applies across borders, because traders can easily shift capital to whichever exchange offers the lowest costs. Sweden imposed its own transactions tax in the 1980s, but swiftly abandoned it when almost all trading shifted from Stockholm to London and other financial centres, raising far less in taxes than anticipated and hitting the Swedish financial industry hard. Cold feet in France about pushing an 11-member transactions tax may result in scrapping or scaling back the proposal significantly. The left-leaning French government’s counterparts in Germany remain keen on the tax, but their leverage as the junior party in a coalition government run by the centre-right will be limited. This is not to say that the tide has turned against France’s hefty tax burden just yet. When the country’s professional soccer players called a strike last week to protest the new 75% “super tax” on incomes above €1 million ($1.38 million), public polls showed little support for the moneyed athletes. The spirit of Robin Hood is still alive, but it’s not nearly as rambunctious as before.


France chips away at retirement reform

President Francois Hollande has managed to do what was once thought impossible: make changes to France’s cherished and generous retirement system with little resistance from unions. His secret? The changes are so small and put off so far into the future that economists say they aren’t worthy of the name “reform.”  A few thousand people gathered across the river from the lower house of parliament, which passed the bill recently ahead of a Senate vote. But the demonstrations have not grown into the massive protests and strikes that brought France to a standstill in 2010, when Hollande’s predecessor, Nicolas Sarkozy, raised the retirement age.  Partially that is because Hollande, a Socialist, consulted with union leaders when drawing up the reform. Also, the changes will fix only a part of what needs changing, analysts say.

“It’s the salami strategy,” said Elie Cohen, an economist at Sciences Po University. “We have a big problem, we don’t know how to fix it, so we cut it into pieces, like a nice sausage.”  Hollande’s reform would lengthen the number of years people must work to receive a full pension, from 41 years today to 43 years by 2035; the first increases begin in 2020.  Economists say there are three problems with the proposal: It takes effect after most baby boomers will have retired, meaning it doesn’t address the cost of paying for their pensions; it still isn’t asking people to work long enough, especially since life expectancy is rising; and it ignores the special deals that allow some workers to retire early and account for two-thirds of the retirement system’s 20 billion euro ($27 billion) deficit.

The European Commission, the EU’s executive arm, and others have raised concerns about how the pensions system will be paid for without further burdening French employers, which already pay the highest payroll taxes in the EU.  The problem with the “salami strategy” is that the reforms are always behind the curve. Jacob Kirkegaard, an economist at the Peterson Institute for International Economics in Washington, says the reform might have worked — if it had been done 20 years ago. Now France needs much more. Among the world’s most developed countries, only Luxembourg has a lower effective retirement age, according to the OECD, an economic policy group. The issue of pensions is so sensitive that no one political party wants to make the painful changes that are needed. So in another few years, France will likely apply another Band-Aid to its pension system. And so it will go, Kirkegaard said, until the crisis in France gets deep enough that it is forced to make the kinds of changes Madrid and Rome have made.


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