PARIS —The Fédération de la Haute Couture et de la Mode has come out in favor of a French government plan to place an extra tax on a fund supporting the fashion and luxury goods sectors, placing it at odds with other industry representatives who have criticized the move.
Ralph Toledano, president of French fashion’s governing body, said the fiscal effort was part of a necessary push to reduce France’s debt and budget deficit. “We have a duty of responsibility and citizenship,” he told WWD. “Everyone must do their share.”
The federation had previously abstained from wading into the public debate around the planned tax, in the hope of first promoting a wide-ranging reform of existing industry structures, aimed at generating savings and efficiency.
“We think it’s entirely inappropriate to throw this debate into the public arena,” Toledano said. “You don’t destroy everything without first knowing exactly what you’re going to replace it with.”
While the discussion has centered on a planned measure in the 2019 French budget that would slap a 7 percent tax on voluntary company contributions to a semi-public fund supporting the fashion and luxury goods sectors, Toledano contended the issue is much broader.
“France needs reforms and budget cuts,” he said. “People should put the public interest ahead of their private interests to make the country more efficient and avoid wasting public funds.”
More than a dozen industry players have criticized the tax project, part of the “revenues” portion of the French budget bill that was approved by France’s parliament on Tuesday. The full budget, including the “expenditures” component, is expected to be adopted definitively before the end of December.
Alongside spending cuts, French President Emmanuel Macron is offering headline tax reductions for households and businesses.
Pierre-François Le Louët, president of the Fédération Française du Prêt à Porter Féminin, was among the officials who signed an open letter in the French daily L’Opinion during Paris Fashion Week urging the French government to rethink its plan on the grounds that it would “threaten the whole ecosystem of the industry.”
Critics of the measure say they are worried in particular about cuts to the budget of the Comité professionnels de développement et de promotion du textile et de l’habillement, or DEFI, which helps to support emerging designers and promote French fashion overseas, among other things.
Many expressed surprise at what they saw as an about-face in government policy, after Macron expressed his support for the fashion industry by inviting leading designers and executives to a high-profile dinner at the Elysée presidential palace last March.
Toledano, who previously sat on the board of DEFI, believes the organization — which manages a budget of 10 million euros — is in dire need of reform. “There are a lot of savings to be made. It’s crucial to determine how we can be more efficient and overhaul practices that are often decades old and out of date,” he said.
He also questioned the need for separate Professional Committees for Economic Development to cover the fashion industry’s activities. While DEFI is in charge of the clothing sector, there are separate organizations for the leather industry and the watch and jewelry sector.
“What is the point of maintaining these structures when you could have direct contracts between the state and the various professional federations?” Toledano said.
The French fashion industry generates annual revenues of 150 billion euros, more than the aerospace and car industries combined, and employs 1 million people directly and indirectly, according to the Institut Français de la Mode.