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French PM Ayrault promises tax system overhaul

Under pressure - French Prime Minister Jean-Marc Ayrault (L) and President François Hollande
Under pressure - French Prime Minister Jean-Marc Ayrault (L) and President François Hollande Reuters/Christian Hartmann
3 min

French Prime Minister Jean-Marc Ayrault has promised to overhaul France's complex tax system after a series of protests have forced the government to scrap some proposed rises and suspend the controversial ecotax on road freight.

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Ayrault promised consultation with unions and employers in an interview with business paper Les Echos.

"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 said in an interview published on Tuesday. "The time has come for an overhaul, in all transparency."

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Facing protests against the green tax from farmers, road haulage operators and others and under pressure from the right-wing opposition over other tax rises, Ayrault pledged that the project would not mean more increases.

Although he did not give much detail, he did suggest that the CSG, a levy that funds some social expenditure, could be combined with general income tax increases.

And he refused to scrap a planned rise in VAT - from 19.6 per cent to 20 per cent for the normal rate and from seven to 10 per cent for the reduced rate - which has been critcised by small businesses, who fear it will reduce their sales, and from the hard left, who say it penalises low incomes.

One union leader, Jean-Claude Mailly of the Force Ouvrière federation, declared the plan a "good initiative" but employer's group, Medef, was less enthusiastic.

"We will go [to talks] the first time but we will not stay if it's just to play Chase The Lady on taxes," said Medef leader Pierre Gattaz.

The right-wing opposition dismissed the plan, with the head of the of the mainstream right UMP's parliamentary group, Christian Jacob, accusing the govenrment of "panicking".

"The priority is not to know if we are going to rearrange taxes in one way or another, but how to lower them," said UMP leader Jean-François Copé "We need to give people money."

The ecotax will not be implemented until the tax system has been revamped, Ecology Minister Philippe Martin said after Ayrault's announcement.

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