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French cuts to focus on income tax, finance minister indicates

French Finance Minister Michel Sapin leaving the Elysée Palace following a weekly Cabinet meeting in Paris. Photo: Stephane Mahe/Reuters

French Finance Minister Michel Sapin leaving the Elysée Palace following a weekly Cabinet meeting in Paris. Photo: Stephane Mahe/Reuters

French Finance Minister Michel Sapin indicated yesterday that cuts promised on the revenue side of next year’s budget would focus on income tax rather than other levies.

President François Hollande said French households would enjoy tax cuts in France next year “whatever happens”, thanks to an expected pick-up in economic growth, but gave no details.

The income tax focus of the pledge would favour middle-income voters, and could rule out a more progressive cut in social security charges that some people on the left of Hollande’s Socialist Party want to see.

“Tax on labour income is what has hurt citizens the most in recent years,” Sapin said on RTL radio.

He reiterated that spending cuts would offset the lower taxes in order to keep the French budget on track.

France aims to cut the budget deficit to 3.8 per cent of economic output by the end of this year and to 3.3 per cent by the end of 2016.

The government releases its 2016 budget plan in September.

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