News / Europe

    French PM Pledges Tax Cuts After Far-right Poll Triumph

    French Prime Minister Manuel Valls leaves a meeting with members of the government at the Elysee Palace in Paris, May 26, 2014.
    French Prime Minister Manuel Valls leaves a meeting with members of the government at the Elysee Palace in Paris, May 26, 2014.
    Reuters
    French Prime Minister Manuel Valls promised on Monday to unveil more tax cuts for households this year, saying the triumph of the far-right National Front in European elections showed the French were fed up with years of tax rises.
     
    Valls stressed France would still make the budget savings needed to bring its public deficit within EU limits. But, in a potential sign of clashes ahead, left-wingers in the ruling Socialist party said the poll results vindicated their opposition to such cuts.
     
    The anti-immigrant, anti-EU party of Marine Le Pen finished first in France with 25 percent of the vote, winning its first ever nationwide poll in a slap both to ruling Socialists and opposition conservatives.
     
    President Francois Hollande's Socialist Party scored 13.98 percent, its worst ever performance in an EU election, while the center-right UMP stood at 20.80 percent, further behind the FN than predicted by pre-vote opinion polls.
     
    Valls, who on Sunday night called the FN win a political “earthquake” for founding EU member France, said it showed the government had to push ahead with plans to lower taxes after many French were faced this year with sharply higher claims.
     
    “We need more tax cuts ... there must be, because it [the tax burden] has become unbearable,” Valls told RTL radio when asked if such a move would be included in future budget plans to be unveiled at the end of the year.
     
    “Until unemployment falls, until purchasing power rises, until taxes fall, the French won't believe us,” said Valls, who was promoted to prime minister by Hollande after his Socialists were routed in March municipal elections.
     
    Valls did not give any further indication of the extent or timing of the new tax cuts, which would come in addition to existing plans to exempt 1.8 million households from income tax later this year at a cost to the state of 1 billion euros.
     
    France weakened in Europe?
     
    France has the highest tax take among developed countries after Denmark. The government has already said it aims to trim the tax burden from 45.9 percent of national income this year to 45.3 percent by the end of Hollande's term in 2017.
     
    Aides to Valls said the prime minister was underlining his intention to push ahead with that overall reduction in the burden rather than announcing plans to go further and which would require financing with additional savings.
     
    Asked if his government would maintain its goal of shaving 50 billion euros from public spending over the next three years as part of efforts to bring its public deficit to within EU limits, the premier replied that it would be “absurd” not to.
     
    “I announced this because not to do it would be absurd - to make the French bear the load of debt and deficit - but we have clearly to do it in the fairest way possible,” said Valls, who on Monday morning attended a post-mortem cabinet meeting with Hollande.
     
    France's deficit stood at 4.2 percent of output last year. Its EU partners have given it an extended deadline of 2015 to bring it within three percent.
     
    However Sunday's poll results will act as encouragement to the left wing of the Socialist Party to resist further rigor in future budgets.
     
    “For years now the Socialist Party has been unable to heal the rift between its leadership, its voters and the left-wing grass roots over Europe,” the “Maintenant la Gauche” (“Now for the Left”) group of left-wing Socialist deputies said.
     
    “Francois Hollande's failure to keep his promise on changing the direction of Europe has only added to the disenchantment of our citizens, who are opposed to austerity and free markets.”
     
    Although the heavy abstention rate meant that barely one in 10 voters actually backed the FN, analysts said the vote showed how the country's political mainstream had failed to persuade voters that European integration still made sense for France.
     
    “The legitimacy of France in Europe is weakened,” Dominique Moisi of the French Institute for International Relations (IFRI) told Reuters TV.
     
    “To function, Europe needs a strong balance between France and Germany. But France is moving the way of Italy or Greece in economic terms and moving the way of Britain in its relationship with Europe.”

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