Bloomberg News

‘Pigeon’ Entrepreneurs Take Hollande Tax Protest to Web

October 03, 2012

French President Francois Hollande

Francois Hollande, France's president. Photographer: Alessia Pierdomenico/Bloomberg

French entrepreneurs have a new mascot -- the pigeon.

Using the bird’s role in French slang as the “sucker,” owners of startups have formed a group dubbed “Les Pigeons” to show that President Francois Hollande’s new taxes make them the fall guys for France’s economic woes. They are protesting the almost doubling of the tax rate on capital gains generated from selling a business in Hollande’s budget for 2013.

The group has gathered more than 34,000 supporters in less than six days on Facebook Inc.’s social network and spurred more than 3,600 posts under the “#geonpi” tag on Twitter, with the founders of Iliad SA (ILD), Vente-Privee and Meetic SA (MEET) throwing in their voices of support.

“The government thinks France’s entrepreneurs are pigeons,” the movement’s initiators wrote on a dedicated Facebook page. “Anti-economic policies are crushing the entrepreneurial spirit and exposing France to a big risk.”

Entrepreneurs have for months called on France’s government to avoid slapping them with more taxes, saying it will dry up interest in creating new companies or drive startups away.

Socialist President Hollande, seeking to appease his base in his first annual budget last week, raised taxes on the rich and big companies and included a minimum of spending cuts to reduce the deficit. The government introduced a 75 percent tax for income above 1 million euros ($1.29 million).

Risk Reward

“We should push entrepreneurs to create companies, products, services, jobs, rather than push them to protest,” said Jacques-Antoine Granjon, founder of online retailer Vente- Privee. “It’s de-motivating for young entrepreneurs.”

With growth stalled and unemployment at a 13-year high, France can’t afford to scare away entrepreneurs and investors, said Granjon, who argued the fiscal changes betray how little the government understands risk-taking and business-creation.

“Entrepreneurs create jobs through work and risk-taking before maybe generating profit,” said Granjon, whose 11-year- old company had 1.1 billion euros of sales in 2011 and employs more than 1,500 people. “If you want economic growth you need a stable backdrop and a just reward for risk and hard work.”

France reconfigured its tax rules to align levies on those who start a business and sell it with income tax rates. That has effectively raised the tax rate on capital gains for entrepreneurs to as much as 60 percent from about 30 percent, said Jean-David Chamboredon, who heads investment fund ISAI.

‘Great Consideration’

The tax increase makes France less attractive than neighboring countries, said Chamboredon, whose fund collects money exclusively from other entrepreneurs and invests it in startups in the technology sector. The average European rate is between 18 and 25 percent, he said.

France could lose out on job creation in high-growth sectors, with Internet businesses, biotechnology, environmental and medical technology likely to be the first to go, “to London or elsewhere,” Chamboredon said.

“We have great consideration for entrepreneurs who create jobs in this country,” Finance Minister Pierre Moscovici said today at the National Assembly. “We’ve taken measures favorable to small companies and if there is discomfort here and there among entrepreneurs, we’ll listen.”

Dating website Meetic’s founder Marc Simoncini was among entrepreneurs who argued the tax change would discourage investment. It fails to take into account the work, effort and costs of transforming a startup into a mature company, he told French television station BFM Business this week.

‘Not Bothered’

Some business figures criticized Hollande’s tax move by voicing support for the “Les Pigeons” movement on Facebook. Xavier Niel -- who created Internet-service company Iliad and started selling mobile-phone packages this year under the brand name Free -- was one of them.

France’s small and medium businesses group CGPME said it has started a petition-signing project against the 2013 budget.

Not all entrepreneurs agree. A group of seven businessmen dissociated themselves from the “Pigeons.” One of them, Alain Assouline, said entrepreneurs who are in a business for the long haul won’t be slapped with a tax increase to 60 percent.

“If you sell your company 10 years after creating it, the rate is sliced in half,” said Assouline, who created web company Les Argonautes 17 years ago and employs 60 people. “We’re not bothered by the capital-gains tax, which we think is normal, but we’d like to see the government pay more attention to small companies’ access to financing.”

‘Flown Away’

Hollande’s 2013 budget had already come under fire for its so-called millionaire tax last week from French soccer bodies who said it would have a “disastrous effect” on the competitiveness of the sport in the country.

Economists have highlighted the risk of piling taxes onto a slumping economy, while business leaders urged Hollande to cut taxes and social charges to give Europe’s second-largest economy a “competitiveness shock” when they met in July during a conference in Aix-en-Provence, France.

Hollande, by showing he will make the rich pay more, has sought to make good on a campaign promise of “social justice.” The tax policies may also give him leverage to push through unpopular labor measures as he faces plunging poll ratings.

For entrepreneurs, fighting against the tax increase has become a matter of life and death, Pierre Chappaz, the Frenchman who founded comparative shopping site Kelkoo and sold it to Yahoo! Inc. for 475 million euros in 2004, wrote on his blog.

“I won’t be part of the protest since I’ve already flown away,” wrote Chappaz, who lives in Switzerland. “I do wish good luck to the birds that are still fighting in Paris.”

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net Kenneth Wong at kwong11@bloomberg.net


Ebola Rising
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus