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Stagnant France to offer €2 billion in tax relief

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Stagnant France to offer €2 billion in tax relief
France's finance minister said it seemed 'legitimate' to give back something to France's less well off for their efforts. File photo:AFP
12:03 CEST+02:00
France's finance minister on Monday confirmed the country would push ahead with massive tax relief for the nation's less well off, saying the money was available, despite the doom and gloom around the economy.

Traditionally tax-loving France may be at an economic standstill, but Finance Minister Michel Sapin told Europe 1 radio  that the 2016 cuts to income tax – mooted to be worth €2 billion - would go ahead as planned.

The cuts would be funded by cost savings at a local and national level.

"We have the means, given the considerable sums spent by the state, local authorities, and social security," he said.

"The number of households paying income tax has gone up considerably between 2010 and now. It doesn't seem strange that we should now go back closer to 2010 levels by paying back less well off French people for their efforts, " the minister was quoted as saying in Le Parisien newspaper.

But Sapin was also keen to stress that tax cuts for the poorer French people wouldn't see the wealthier footing the bill. 

"No one will pay higher income tax in 2016," he told Europe 1.

The finance minister also confirmed France wouldn't be shifting its deficit targets to compensate for the tax cuts. "The deficit has to come down," he said.

On Monday Les Echos said the planned tax cuts would hit the €2-billion mark, while French president François Hollande said on August 21st that the amount of tax relief would depend on growth reached in 2016.

Hollande is expected to announce more details of the tax relief plan on September 7th.

France's economy stagnated in the second quarter after an encouraging 0.7 percent rise in GDP in the first quarter, with investment falling away, according to recent official statistics.

There was also bad news in the form of slowing growth in investment, which rose only 0.2 percent compared to 0.6 percent in the first quarter.

Consumer spending also slowed sharply, from a 0.9 percent rise in the first three months of 2015 to only 0.1 percent in the second quarter.

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