To stimulate the economy, the state — known for exorbitant corporate taxes and social charges — says it wants to cultivate firms that have been around for eight years or less and that invest at least 15% of their budgets in research and development. A bill announced Dec. 11 by the center-right government would exempt high R and D firms from paying any corporate income tax for their first three years of operation, wipe out all social charges paid to the state for six years and give capital-gains tax exemption to investors and other shareholders.
Biotech entrepreneur Philippe Pouletty, president of the Strategic Council for Innovation, says the move could double the number of "innovative" companies in France (there are about 2,500 today) and make it one of the most attractive places in the world to do business. So far, the bill is not meeting with much opposition. Of course, all French companies would like to see their taxes cut. Best put that on Santa's list for next year.
TOBACCO
Light Brands Go Up In Smoke
In yet another blow to the already wheezing tobacco industry, the European Court of Justice upheld legislation forcing tobacco manufacturers to cover cigarette packets with stronger health warnings, remove the labels Mild and Light from their packaging and cease producing high-tar cigarettes within the E.U. — even if the cigarettes are destined for outside markets. The ruling comes one week after E.U. authorities agreed to ban most forms of cigarette
advertising.
Tobacco firms slammed the decision as flawed, but there is little they can do. And while it may cost companies tens of millions of euros to modify packaging, some doubt the bottom line will change. "It's not a material cost," says Martin Steinik, an analyst at J.P. Morgan. And he notes that there were no abnormal share-price movements relating to tobacco companies after the court's ruling was announced. One way analysts expect companies to differentiate their cigarettes in the future may be through color, with blue packaging, say, denoting a milder brand.
EUROBLUES
Driver's Seat
They call him the Texan: Paolo Fresco, the white-haired Fiat chairman, who last week staved off an apparent coup orchestrated by an Agnelli brother, Italy's most powerful investment bank and Prime Minister Silvio Berlusconi. When news leaked last Monday that Fresco and CEO Gabriele Galateri were on their way out, Fresco fought back with a fiery interview in La Repubblica, saying he needed to stay to help save the company and that Berlusconi had "gone mad." By Friday, Fiat's board reconfirmed Fresco as chairman. Now Fiat needs to stem losses ahead of what seems an ever more likely sale to General Motors, which already has a 20% stake in the Italian automaker. That trick will require more than sharp spurs. — By Jeff Israely
INDICATORS
Crossing The Sick-It Line
Last year, British workers took 33 million sick days due to work-related ill health, says a government study — nearly double the number in 1995. Contrast that to the number of workdays lost to strikes over the past year — a mere 550,000.
Trading Places
Sweden's OM stock exchange operator is to join forces with the London Stock Exchange on a new derivatives-only venture called EDS London. The move comes ahead of an anticipated boom in trading activity as desks switch from country-based dealing to sector-based dealing.
Paying The Cable Bill
Major shareholders in Cable & Wireless are considering legal action over the firm's failure to disclose a potential $2.37 billion tax liability. It's one more reason for shareholders to be piqued; since the height of the tech boom, the value of C&W shares has plummeted 97%.
On A Psychological Note
The European Central Bank is pondering a €1 banknote as a way of curbing inflation. Consumers are thought to value notes more than coins and will spend them less willingly — thus keeping prices down.
BOTTOM LINES
"If anyone here in this hall thinks they would be able to do better, he should do it."
GERHARD SCHRÖDER,
German Chancellor, whose economy is dragging down the euro zone
"Stores should be able to open when their customers want."
MICHAEL SCHEIBE, spokesman for German retailer KarstadtQuelle, supporting the "modern" German idea that stores should be open past 4 p.m. on Saturdays
"It has been absolutely mad in the past months as everybody wanted to be the first to order."
JOACHIM GROH, German Porsche dealer who has sold in advance 66% of his allocation of the new Cayenne model