Daily Times

PARIS: France’s government unveiled Friday plans to lower taxes on households and companies as the ruling Socialists line up their budget for the 2017 election year. The gesture to households would “take the form of a reduction in income taxes by 20 percent for the middle class,” Finance Minister Michel Sapin told AFP. France votes in presidential elections in April and May next year and President Francois Hollande’s popularity is so low that he would probably not make it past the first round, according to opinion polls. He has not said whether he intends to run for re-election. Around 5 million households would benefit from $1.1 billion reduction in income taxes, worth about 200 euros per family, Sapin said. He also said that the headline tax rate for small and medium-sized companies would be reduced to 28 percent — the European average in 2017 and 2018 — and for all companies from 2020. That is a drop from the current headline rate of 33 percent, although small companies benefit from a lower rate on a certain amount of profits. However Sapin said that despite the tax cuts France would honour its pledge to the EU to reduce its public spending deficit to 2.7 percent of gross domestic product in 2017. “We’ve made that promise to parliament and EU authorities and we’re going to keep it,” said Sapin. The announced cuts to income tax, coming just over seven months from the presidential election, would take the total reduction since 2014 to six billion euros. Criticised for sharp tax hikes at the start of his five-year term in the face of a huge budget gap in the dark days of the eurozone crisis, Hollande has since turned towards a gradual reduction in tax rates, although the French economy has posted only modest growth and unemployment remains near record highs. According to data from the French Economic Observatory, the tax bill of French taxpayers has gone up by 35 billion euros during Hollande’s term in office, with average spending power down by 350 euros from 2010. Sapin also announced a change allowing all retirees to deduct expenses for at-home services, a change which should benefit 1.3 million households at a cost of a billion euros.