PARIS: French Prime Minister Jean-Marc Ayrault, facing a growing tide of anger over tax rises, vowed yesterday to overhaul the fiscal system.
Ayrault, who heads a left-wing government under strong pressure on several fronts, promised widespread consultations on how the tax regime should be reformed.
The move was welcomed by unions but business groups were wary and the centre-right opposition called the plan “surreal”.
It was unclear how far the government would be willing to go, after President Francois Hollande earlier this month vowed to stick by his economic policies following a credit downgrade.
“The French tax system has become very complex, almost unreadable, and the French too often are not convinced that what they are paying is fair,” Ayrault told business newspaper Les Echos in an interview.
“The time has come for an overhaul, in all transparency,” he said, promising a “profound dialogue” with trade unions and business groups. Ayrault provided few details, but said the reform would not lead to further tax increases. He suggested that one of the levies used to fund social and welfare spending, the CSG, could be combined with general income taxes, and said the government would not back away from an increase in value added tax due to take effect on January 1. That increase — from 19.6 percent to 20 percent for the standard rate and from seven to 10 percent for the reduced rate — has drawn criticism from small businesses who fear it will cut consumption.
The government has come under concerted fire for plans for wide-ranging tax rises that along with major spending cuts are aimed at reducing France’s budget deficit. AFP
