PARIS (Reuters) – Economy Minister Bruno Le Maire sought to reassure business leaders on Monday about the abolition of the business value added contribution (CVAE) as the announcement of the postponement of its abolition to 2027 has raised concerns among employers’ organisations.

The government had initially promised to abolish the CVAE – a local tax payable by companies that achieve a certain level of turnover – by 2024 before announcing last week its phasing out at the end of 2027.

In an interview on Sunday with Le Figaro, the new president of Medef, Patrick Martin, denounced “a stroke of the penknife” on the part of the government, arguing that many companies had integrated the abolition of the CVAE into their “business plan” and that they were going to be “destabilized”.

“I see that he is worried about the government’s fiscal policy. There is nothing to worry about,” Bruno Le Maire reacted on France Inter on Monday.

“We have been remarkably consistent in lowering taxes for both households and businesses. I will not deviate from that line.”

But “we are obliged to take into account the situation of public finances”, explained Bruno Le Maire. “If we go too fast in lowering taxes and we load the mule from the point of view of debt and deficits (…) interest rates will increase, the conditions for financing companies will be worse and so there will be less business investment and we will all be losers”.

The minister recalled that the government would abolish next year “a billion production tax, a billion CVAE, to abolish it definitively by 2027”.

The subject should be on the agenda of the Meeting of Entrepreneurs of France (REF), annual high mass organized by the Medef, where Prime Minister Elisabeth Borne will intervene on Monday.

(Written by Blandine Hénault and Bertrand Boucey, edited by Kate Entringer)

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