France unveils major tax cuts as growth flags

Paris : The French government yesterday unveiled billions of euros in tax relief for businesses and households, alongside further budget cuts, as President Emmanuel Macron struggles to deliver more jobs and higher growth as promised. The former investment banker’s poll ratings have dived in recent weeks as growth has slowed despite a series of reforms presented as unavoidable shock treatment for getting France on solid financial footing.

Critics say most people have been left behind by Macron’s policies so far, which have seen him raise taxes on retirees while cutting a wealth tax on top earners. Pensions and welfare benefits will be shaved further in the 2019 budget -- Macron complained in June that France spends “a crazy amount of dough” on social programmes. And 4,100 more public sector jobs will be axed as Macron aims for a deficit of 2.8 percent of GDP, below the three percent limit set for EU members.

Higher taxes on fuel and cigarettes will also hit consumers. But the government says the pillar of the budget will be a combined 19 billion euros ($22.4 billion) of tax cuts for businesses and six billion euros in tax relief for individuals, including a gradual end to an annual housing tax.Officials are betting Macron’s tax cuts -- which also include a pledge to cut corporate taxes to 25 percent from 33 percent over his five-year term -- will encourage firms to hire and invest, and consumers to spend.

“This is the biggest tax cut for households since 2008,” Budget Minister Gerald Darmanin said. Finance Minister Bruno Le Maire meanwhile acknowledged that results from Macron’s reform drive so far “are unsatisfactory compared with our European neighbours, and we certainly don’t intend to stop here”. “We’re doing less well than our European partners on unemployment, growth, the deficit and debt,” he said.