Emmanuel Macron on Wednesday urged companies that generate exceptional profits to pay more to their employees, amid public anger against pension reform. A guest of the 1 p.m. newspaper of TF1 and France 2, the President of the Republic judged that “there is still a bit of cynicism at work, when you have large companies that earn such exceptional income that ‘they end up using that money to buy back their own actions.It intends to “ask the Government to work on an exceptional contribution” so that “the workers can take advantage” of this stroke of luck.
In addition to dividends, more and more companies are choosing to buy back their own shares, an operation designed to support the stock price. French CAC 40 companies generated more than 142 billion euros in retained earnings in 2022 on the back of luxury and energy records, benefiting from inflation and the energy crisis, augering a good year for shareholders.
Another way than the tax on the super profits of energy companies
Emmanuel Macron ruled out the solution of taxing super profits as “we did to energy companies” that pay the State the income from their sales above a ceiling price of 180 euros per megawatt-hour (Mwh). The Member States of the European Union also adopted in late September a system to tax the super profits of the energy giants. The “temporary solidarity contribution” allows the EU to deduct a third of the taxable profits of multinationals that produce and distribute oil, gas and coal.
The issue of superprofit taxation had divided the government last summer, with the Chancellor of the Exchequer opposing it while Prime Minister Elisabeth Borne had been more open to the idea. However, not all employees will be affected by Emmanuel Macron’s new proposal.
As a result of the value sharing agreement
The president of the Confederation of SMEs, François Asselin, reacted to France 2 estimating that the proposed measure was going to “focus on large companies” and that “it is not really an issue for SMEs.” The Medef for its part did not react immediately. The two main employers’ organisations, as well as the government, recently welcomed the value-sharing agreement between trade unions and employers’ organisations, which aims to extend profit-sharing schemes to all companies with 11 employees and over, participation and sharing of value. bonuses (Macron bonus). Prime Minister Elisabeth Borne announced in February that she wanted to sign this agreement into law.
During his interview on Wednesday, Emmanuel Macron said he wanted to “re-engage” a dialogue with the social partners after the adoption of his highly unpopular pension reform without a vote on the parliamentary text, the government took responsibility and survived for bit. one of the two motions of censure filed against him by the oppositions.
French banks are doing a lot of share buybacks in 2022
The presidential proposal comes at a time when share buybacks are on the rise. In 2022, CAC 40 companies buy back 23.7 billion euros of shares, according to the Vernimmen financial letter. TotalEnergies expects to shell out $2bn in the first quarter of 2023 for these acquisitions, which is as much as the group paid under an EU and UK super-profits tax. The Stellantis car group wants to spend €1.5 billion on share buybacks and pay €4.2 billion in dividends, while paying €2 billion in bonuses for its employees.
French banks have also been especially generous with their shareholders. BNP Paribas wants to dedicate 5 billion euros to a share buyback program, the equivalent of half of its record profit of more than 10 billion euros in 2022. Société Générale has decided to dedicate the equivalent of 90% of its net profit to its shareholders through a cash dividend and share repurchase program.
Luxury giant LVMH will distribute €400m to its roughly 39,000 French employees, spend up to €1.5bn on share buybacks and pay some €6bn in dividends to shareholders, including nearly €3bn to the CEO’s family Bernard Arnault. . In the United States, President Joe Biden’s 2024 budget foresees, in particular, “a quadrupling of the tax applied to the repurchase of shares.”
A measure aimed at companies with more than 5,000 employees
The Minister of Economy and Finance, Bruno Le Maire, clarified in the early afternoon in the Senate that with the aim of “finding the right balance between the competitiveness of companies and the need to better distribute value”, the idea of Government would force companies that have the means to buy back their own shares in the markets to allow their employees to benefit more from their financial largesse.
“We want it to be big. We could consider, for example, doubling the amounts paid for participation, profit sharing or tax-free bonuses”, the minister continued, specifying that this measure would apply to “large companies with more than 5,000 employees and those who buy back shares”. Bruno Le Maire added that the government would make this proposal to the social partners so that they can negotiate such a measure among themselves.
Source: BFM TV
