Massive tax cuts as France puts house in order

– France will cut taxes on businesses and individuals by roughly €11 billion (R168 billion) next year, faster than the government had originally intended, Prime Minister Edouard Philippe has said.

The goal is to create incentives for investment, hiring and economic growth, Philippe told Les Echos daily in an interview published on its website on Tuesday.

President Emmanuel Macron has promised to put France’s financial house in order, with plans to cut taxes by a total of €20 billion over his five-year term.

At the weekend, Philippe had indicated tax cuts of around €7 billion for next year.

“But last week, with the president, we decided to accelerate the rhythm in order to get the most economic impact from this strategy,” he told Les Echos.

Key measures will include eliminating a local residence tax for 80% of French households and reductions in wealth taxes, while corporate taxes will eventually be dropped to 25% by 2022.

Philippe said the government was counting on economic growth of 1.6% this year and 1.7% in the following 12 months.

Spending cuts will also help offset the hefty tax cuts, expected to represent 0.6% of France’s gross domestic product.

But Philippe reiterated the government’s pledge to bring the French budget deficit to below 3% of economic output, in line with EU budget rules.

“We have told parliament that we are aiming for a deficit of 2.7% of GDP next year,” he said. – AFP

The goal is to create incentives for investment, hiring and economic growth. Edouard Philippe French prime minister