Bank of France Governor Criticizes Tax Policy

The Governor of the Bank of France, François Villeroy de Galhau, has publicly expressed his dissatisfaction with the current state of parliamentary fiscal discussions. Speaking during his traditional New Year's wishes, Villeroy de Galhau focused on the impact of political rhetoric regarding taxation.

He argued that the 'creativity' displayed by politicians when debating tax issues creates a hostile environment for the business community. Even when these debates remain theoretical or 'virtual,' the Governor asserts that they produce genuine and negative consequences for the mindset of entrepreneurs across the country. His statement serves as a direct appeal to political actors to cease using tax policy as a tool for political gamesmanship.

François Villeroy de Galhau utilized his annual address to deliver a stern message to lawmakers regarding the impact of their debates on the economy. The central theme of his criticism was the phenomenon of 'tax creativity' within the parliamentary arena. This term refers to the various proposals and hypothetical changes to the tax code that are frequently floated during political discussions.

According to the Governor, this approach to fiscal policy is not merely theoretical. He emphasized that these discussions, regardless of whether they result in actual legislation, weigh heavily on the business community. The constant uncertainty and the perception of a fluctuating tax landscape are cited as primary factors dampening the enthusiasm and confidence of entrepreneurs who are essential to the French economy.

The core of the Governor's concern lies in the psychological impact on business leaders. Entrepreneurs require a stable environment to make long-term investment decisions. When parliamentary debates introduce the possibility of new taxes or significant changes to existing ones, it creates an atmosphere of hesitation.

Villeroy de Galhau noted that the effect is 'very real and negative' on the 'moral des entrepreneurs'—the morale of entrepreneurs. This decline in confidence can lead to delayed investments, reduced hiring, and a general slowdown in economic activity. The Governor's plea is essentially a request for politicians to recognize the real-world consequences of their words, even when those words are part of a 'virtual' debate that does not become law.

The Governor's message culminated in a direct call to action. He urged an end to the practice of using tax policy as a political football. The phrase "arrêter de jouer avec l'impôt" (stop playing with taxes) encapsulates his view that the current approach is frivolous and damaging.

By highlighting the negative impact on business morale, Villeroy de Galhau is positioning the Bank of France as a defender of economic stability. His intervention suggests that the institution views the current parliamentary approach to fiscal matters as a risk to the broader economic health of the nation. The message is clear: predictability is vital for economic prosperity, and political gamesmanship undermines that predictability.