Hollande’s tax hikes backfire as they stymie French consumer demand

President François Hollande’s attempt to cut France’s budget deficit with tax increases may have boomeranged.

Not only did the increases fail to generate as much revenue as expected, they also wrought declining consumer demand, figures released yesterday showed. French tax receipts amounted to €284bn ($387bn) in 2013, up €15.6bn on 2012, though €14.6bn less than the finance ministry had predicted, France’s national auditor said in a report.

The added tax burden is weighing on households, with consumer spending unexpectedly falling 0.3% in April after declining 0.5% in the first quarter, national statistics office Insee said in a separate report.