Wire Service
4 minute read
8 Apr 2019
1:59 pm

French PM sees tax cuts as solution to ‘yellow vest’ anger


The French government must implement bold tax cuts in response to the "yellow vest" protests, Prime Minister Edouard Philippe argued Monday as he revealed the results of a major public consultation on the crisis.

Taxes must come down, says France's PM. AFP/Philippe LOPEZ

Giving the first conclusions of a “Great National Debate” which was launched in January, Philippe said that French citizens had expressed “an enormous exasperation” over the country’s tax burden, which is the highest in the world.

“The debates show us very clearly which way to go. We need to lower taxes, and lower them more quickly,” Philippe who told an audience in Paris.

The “yellow vest” protests, so called for the fluorescent vests worn by demonstrators, began in small-town France in mid-November, initially over fuel taxes before spiralling into a nation-wide revolt against President Emmanuel Macron.

The 41-year-old came to power in May 2017 promising pro-business reforms and tax cuts for companies and investors to encourage job creation, earning him a reputation as a “president of the rich.”

Philippe, a centre-right fiscal hawk who has previously called for tax cuts and reductions in public spending, said the government needed to go further.

“We have reached a point where hesitating would be worse than an error, it would be an offence,” Philippe added. “The need for change is so radical that any conservatism, any feebleness would be unforgiveable in my view.”

Macron is expected to announce his conclusions in a major speech in the next fortnight, with the “Great National Debate” billed as a watershed moment in his nearly two-year-old presidency.

Though he is known to favour further tax cuts too, he has ruled them out without reductions in public spending — which could prove hugely controversial.

Successive French leaders have faced street protests every time they attempted to trim France’s vast public sector, underlining the difficult balancing act ahead for France’s youngest ever president.

The country has the highest taxation rate in the world, according to the Paris-based Organisation for Economic Cooperation and Development, with taxes equivalent to 46.2 percent of its gross domestic product (GDP).

French public spending is the second-highest in the world after Finland and is the equivalent of 56.8 percent of GDP, according to the OECD.

– National ‘Bla-bla’? –

The “Great National Debate” has involved 10,000 meetings in community halls around the country, around two million online contributions and has seen Macron appear at local events for nearly 100 hours in total.

“I intend to transform anger into solutions,” he declared in an open letter to the country on January 13 which launched the exercise, referring to the “yellow vest” protests which had seen crowds block roads and repeatedly riot on the Champs-Elysees.

“Your proposals will help build a new contract for the nation,” he promised.

After a shaky start, when the chief organiser had to step down due to an outcry over her salary, most observers see the exercise so far as a qualified success for the president.

The number of contributions has demonstrated a level of enthusiasm that looked uncertain at the start, while Macron’s approval ratings have climbed from record lows thanks to his townhall appearances around the country.

But many experts believe the former investment banker faces only hard choices ahead, with voters now expecting the months of discussions to translate into policies to improve living standards.

Critics have dismissed the exercise as the “Great National Bla-bla”.

“Every debate has given him some new ideas. But he hasn’t made his mind up yet,” an aide told AFP last week on condition of anonymity. “He’s going to consult some more. But ultimately he’ll decide on his own, and perhaps at the last minute.”

'Ultimately he'll decide on his own'. POOL/AFP/Ludovic MARIN
‘Ultimately he’ll decide on his own’. POOL/AFP/Ludovic MARIN

He has ruled out reintroducing a special tax for the wealthy which he scrapped early in his term.

Reinstating it has been one of the main demands of the “yellow vests” who continue to mobilise every Saturday to denounce inequality and Macron’s policies, but in far smaller numbers than at the start of the year.

A referendum could also be on the cards, possibly to validate plans to reduce the number of national lawmakers and change the voting system for some seats.

As well as lower taxes, Philippe said that several other themes which had emerged during the consultation.

Citizens wanted a more direct say in the running of the country — so-called “participatory democracy” — and action to combat climate change.

“The president has said it: we can’t continue to govern like before,” he added.