President Nicolas Sarkozy went on primetime TV Sunday to unveil plans for new taxes he hopes will fix France's ailing economy and boost his credibility ahead of polls he is tipped to lose to a Socialist.

"/> President Nicolas Sarkozy went on primetime TV Sunday to unveil plans for new taxes he hopes will fix France's ailing economy and boost his credibility ahead of polls he is tipped to lose to a Socialist.

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Sarkozy hikes taxes in pre-election gamble

President Nicolas Sarkozy went on primetime TV Sunday to unveil plans for new taxes he hopes will fix France's ailing economy and boost his credibility ahead of polls he is tipped to lose to a Socialist.

Sarkozy hikes taxes in pre-election gamble

The right-winger has not confirmed he will stand for re-election, but he gave his strongest hint yet he will be a candidate in the election that opinion polls predict will be won by François Hollande.

“I have a rendezvous with the French. I will not shy away from it,” Sarkozy told journalists who pressed him on whether he would stand in the election, the first round of which will be held in April.

In an hour-long broadcast carried by six channels, Sarkozy unveiled plans for a hike in the sales tax to 21.2 percent and a 0.1 percent “Robin Hood” financial transaction tax.

He also promised a raft of measures on reducing work time to cut salaries to save jobs, increasing the number of young people taken on as apprentices and creating a new bank to invest in French industry.

Sarkozy’s ministers say he believes the reforms will show that, unlike Hollande, he is courageous enough to do the dirty work to save France from economic meltdown.

But the president, who staked his reputation on boosting the French economy, faces an uphill task. He is behind in the polls, unemployment stands at nearly three million, a 12-year high, and public debt is at record levels.

Sarkozy’s television appearance came a week after Hollande launched his own campaign with a blistering attack on the faceless” world of finance.

He later outlined his plans to reverse Sarkozy’s legacy, promising €20 billion ($26 billion) in new spending by 2017, the creation of 60,000 new teaching jobs and 150,000 state-subsidised new jobs for young workers.

An opinion poll this week said Hollande would take 56 percent of the votes in the second round of the election in May, with Sarkozy scoring 44 percent.

Sarkozy’s planned sales tax hike of 1.6 percentage points — to 21.2 percent — aims to shift the burden of paying for social security from employers to consumers, help create jobs and make French firms more competitive.

But some economists warn that the reform could hit domestic consumer demand, the main motor of the flat-lining French economy. Members of Sarkozy’s own UMP party also fear it could lose him votes.

Sarkozy said the new 0.1 percent tax on financial transactions would come into effect from August in France. He said it would enable French companies to keep jobs at home instead of out-sourcing them abroad.

He said he hoped to “create a shock” with the controversial tax and inspire other European countries to follow his lead, despite vocal opposition from some EU leaders.

Sarkozy used Sunday’s interview to argue that measures taken to end the financial crisis threatening Europe and the rest of world had started taking effect.

“Europe is no longer on the edge of the abyss,” he said. “The elements of a stabilisation of the financial situation in the world and in Europe are in place.”

His comments came as the sovereign debt crisis continues to dominate political debate in Europe and against a backdrop of frantic negotiations on a write-down deal between Greece and its creditors.

Sarkozy also said that France’s public deficit would be better than predicted for 2011, at 5.3 or 5.4 percent of gross domestic product instead of the 5.7 percent forecast.

The interview came two weeks after France suffered the humiliation of losing its top triple-A credit rating with Standard and Poor’s.

The president got unexpected support on Saturday when centre-right German Chancellor Angela Merkel’s party said she would join Sarkozy at campaign rallies in the coming weeks to boost his re-election chances.

Merkel may be worried that a Socialist victory in France could derail the German-led austerity drive — grudgingly backed by Sarkozy — that aims to resolve the European debt crisis.

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Leaders Sarkozy and Juppé stumble in race for Elysée

Right-wing candidates for the French presidential election face off in the first round of a US-style primary on Sunday with former president Nicolas Sarkozy and ex-prime minister Alain Juppe fighting to avoid being knocked out by an outsider.

Leaders Sarkozy and Juppé stumble in race for Elysée
Alain Juppé and Nicolas Sarkozy. Photo: AFP

In a contest overshadowed by the election of Donald Trump in the United States, support for the early favourite Juppe has slipped and Francois Fillon, who served as prime minister under Sarkozy, has risen fast.

The right-wing nominating contest is crucial because with the French left divided, the winner is expected to go on to take the presidency in May, beating far-right leader Marine Le Pen in the runoff.

Juppe, 71, entered the two-month-long contest with polls showing him to be France's most popular politician, but his approach of playing the moderate against the fiery Sarkozy and the conservative Fillon appears to be backfiring.

Most polls now show Juppe and Sarkozy are neck-and-neck at around 30 percent, with Fillon close behind after making striking progress in recent weeks.

The two winners on Sunday will go through to the second round run-off a week later.

Two becomes three

“We were expecting a duel but in the end a three-way contest has emerged,” political scientist Jerome Jaffre said in Le Figaro newspaper on Thursday.

Many have noted that 62-year-old Fillon's rise had coincided with the publication of his latest book entitled “Beating Islamic totalitarianism”.

An often confused final TV debate of the seven candidates on Thursday offered few clues about the possible outcome, although viewers polled afterwards said Fillon had performed the strongest.

Sparks flew when Sarkozy was asked about fresh claims that he received millions in funding from the late Libyan leader Moamer Kadhafi towards his 2007 campaign.

Sarkozy called the question “disgraceful” and refused to answer.

Turning to the Trump effect, the former president said a more isolationist America created “a fantastic opportunity for France and Europe to re-establish a leadership role” on issues including border security and the reform of the UN Security Council.

“The next five years will mark the return of France and Europe to the international scene. America won't be there to put us in the shade,” he said.

Juppe meanwhile said the Trump-era heralded a triple “shock” — in the areas of trade, defence and the environment.

A return to protectionism would be “a tremendous regression”, Juppe said, while warning Europe against being “naive” in its dealings with the United States.

The three leading candidates have similar programmes, underpinned by pledges to reinforce domestic security in a country still under a state of emergency following a series of jihadist attacks.

They also share a desire to reinforce European borders and reduce immigration, while tax cuts also loom large.

The choice will come down to style.

Sarkozy has emphasised his tough-guy credentials, saying it makes him a better choice to handle Trump than the mild-mannered Juppe.

Fillon, who is popular in the business world, has promised “radical” economic measures but is the most conservative of the three on social issues.

Another unknown factor in Sunday's first round is the number of left-wing voters prepared to pay two euros and sign a declaration that they subscribe to “the values of the centre and the right” to vote in the right-wing primary.

Those who do are expected to vote against 61-year-old Sarkozy, who remains a highly divisive figure in France four years after he left office.

When the right-wing candidate is chosen on November 27, it is expected to trigger an announcement from deeply unpopular Socialist President Francois Hollande on whether he intends to bid for re-election.

On Wednesday, Hollande's former economy minister Emmanuel Macron announced he would stand as an independent.

by AFP's Guy Jackson