"Reduce taxes to help the economy"

Steve Forbes is quite clear about what France should do to liberate its economy: Reduce taxes.

The Connexion spoke with him at The Forbes CEO Forum Europe, a gathering of some of Europe's most powerful men and women in Cannes on the Riviera.

Mr Forbes takes a keen interest in Europe. Although he freely admits languages “are not his forté”, he has affection for the country. His wife was brought up in Paris and, he said, the European perspective has rubbed off on his family.

France, he feels, is a country with huge potential in both Europe and the world.

The country, he believes, is held back by over-complicated and non-transparent fiscal policies.

He said: “France could be the country that comes up with the next Microsoft or Google. It is a country that is more than capable of producing the right environment for this kind of thing to happen.”

Reduce the tax burden is the answer. This includes wealth tax, which he says is needlessly complicated, unnecessary and fails to attract the right kind of investor to the country.

He gave a strong caveat before continuing: “It is not my place to criticise or suggest ways countries could improve.”

However, he did not hold back on delivering his opinion. He said: “Sarkozy needs to implement a flat tax rate. This would see the economy grow rapidly.

“It would also give him the support and success to be able finally to deal properly with the unions.”

Mr Forbes was speaking before a day of industrial action by French unions. He made a comparison with Margaret Thatcher's fiscal reform programme of the 1980s.

He said: “Mrs Thatcher made radical tax reforms in the 1980s. These very quickly had an impact of the economy. Because of this she was in a much stronger position to deal with the unions, especially the miners.

“Public opinion polls say that the French public does not feel he moved as quickly as he could have, that he has been too willing to compromise,” he added.

“I believe radical tax reform would excite the public imagination. It would be making the case to the French people that simple tax would unleash the French economy.

“When you make radical tax changes you create new forces within an economy that you didn't have before.

“There are 300,000 French people living and working in London. It is the biggest French city outside of France. You have to ask yourself why.”

Mr Forbes is upbeat about what France can achieve under Sarkozy. Unsurprisingly for a Republican he is especially happy about the French President's overtures toward the US.

He said: “In 2003 there was a definite chill in relations between France and the US.

“One of the good things about Sarkozy is that he has been making positive approaches. He has made it easier to go forward.

“What Chirac did in 2003 certainly didn't save his political career.”

One aspect of French foreign policy Mr Forbes is scathing of is the proposed Mediterranean Union (MU).

The MU was a central plank of Sarkozy's 2007 election campaign, which on the surface aimed to improve business, political and cultural relations with North Africa and the Middle East, areas where France still has historical wounds to heal.

However, Mr Forbes warned: “The challenge of the MU is that it was seen, as running parallel to the EU, as a way of keeping Turkey out of Europe. Turkey knows this. It is a non-starter.

“In the long term, it will be a good thing for both Turkey and Europe, to have Turkey as a member of the EU.

“The negotiations for this to happen will take years but if they proceed at a steady pace they will succeed. One day.”