France proposes accelerating tax cuts to ease unrest

7 Dec 18

France may bring forward planned tax cuts to quell unrest in the country - but this would have to go “hand-in-hand with a decrease in spending”, the finance minister has warned. 



The government announced on Wednesday evening it would scrap the planned fuel tax increases from the 2019 budget, which was the initial reason for weeks of violent protests

Protests are expected to continue this weekend over the general rise in the cost of living and growing dissatisfaction with president Emmanuel Macron.

To tackle the violence, prime minister Edouard Philippe said that “exceptional means” would be used. He said close to 90,000 police officers would be on duty across the country and armoured vehicles would be deployed in Paris – a first since 1968.

French finance minister Bruno Le Maire said yesterday at an economic conference: “If we need to accelerate tax cuts, whether for companies or households, I am in favour.

“But in this case, it must go hand-in-hand with a decrease in spending.”

He added that he wanted workers’ bonuses to be made tax exempt as soon as possible. The government hopes this will stop people in the country protesting because they feel financially squeezed.

French budget minister Gerald Darmanin vowed yesterday to keep France’s national accounts “in order” in 2019, despite the decision to scrap the planned increases to fuel taxes.

He added scrapping the planned tax hikes would cost the government €4bn.

The French government had promised to introduce a raft of tax cuts, with a value of about €6bn, with its Finance Bill for next year, including a decrease in the ‘residence tax’ and exemptions for employees from social security payments.

But taxes on fuels and tobacco were planned to go up. The tax hikes on fuel – now scrapped - were set to kick in on 1 January next year, with the levy on diesel to go up by 6.5 cents per litre and tax on petrol to increase by 2.9 cents.

A dozen museums, shops, restaurants and other businesses are expected to shut after authorities warned of another wave of “major violence” this weekend.  

According to French police earlier this week, three people have died since the unrest started about two weeks ago and hundreds of people have been arrested. Some media outlets have reported yesterday that four people have died.

The French were already unhappy with the cost of diesel, the most commonly used fuel in French cars, having risen by about 23% in the last year - the highest price for diesel in France since the early 2000s.

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