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French prime minister launches pro-business reform plan

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MAJOR STEP: Corporate tax would be cut from 33 pc to 25 pc in the next five years -


Paris: French Prime Minister Edouard Philippe unveiled an ambitious programme of tax cuts and reduced public spending on Tuesday designed to boost corporate investment and end the country’s reliance on state borrowing.


Philippe put spurring entrepreneurship at the heart of his first policy speech to the National Assembly after presidential and parliamentary elections in May and June.


“Businesses must want to set up and develop on our territory rather than elsewhere,” Philippe told lawmakers, announcing that corporate tax would be cut from 33 per cent to 25 per cent in the next five years.


Tackling France’s chronic overspending was a priority, he said, warning that the public debt now totalled 2.1 trillion euros, nearly the equivalent of an entire year’s economic output.


“We are dancing on a volcano that is rumbling ever louder,” Philippe told the newly elected National Assembly, saying that public spending would be cut and the public deficit would be brought below 3.0 of GDP this year.


“France cannot remain the champion both of public spending and taxes,” he said. Almost all of the measures confirmed election promises from 39-year-old centrist President Emmanuel Macron who was elected France’s youngest ever president in May after promising to modernise the country.


Philippe has already outlined one of the government’s biggest economic reforms: an overhaul of France’s rigid labour law which will enable companies to negotiate working terms and conditions with their employees.


The measure faces resistance from leftist opponents. The powerful CGT trade union has already called for street protests and strikes in September.


The government will face little difficulty in passing legislation in the lower house of parliament where candidates from Macron’s new Republic on the Move (REM) party won more than 300 out of 577 seats in last month’s election.


The upper-house Senate, where rightwing Republicans hold a majority, will be trickier.


Philippe said Tuesday that the government would also honour other campaign pledges including introducing a new national service for young people and making dental and eye care free on the health system.


Other measures including raising the price of cigarettes progressively to 10 euros from their current level of 7 euros to fight smoking-related diseases, the biggest cause of preventable deaths in France.


Macron, France’s youngest president at just 39, gave a state of the union address to both houses of parliament on Monday, a novelty which he intends to turn into an annual event to present his vision for the country. He said he was not aiming for mere reforms but a “transformation” of the political system and the economy. —AFP


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