New PM Valls makes pledge on tax cuts

France’s new government wins traditional vote of confidence by 306 votes to 239 after Prime Minister’s speech

7 April 2014
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FRANCE’S new government has won its first challenge - the MPs’ traditional vote of confidence.

Following Manuel Valls’ first major address after being named Prime Minister, 306 MPs voted for the confidence motion, with 239 voting against. Eleven socialist MPs abstained.

Earlier, Mr Valls had set out the government’s plans in a wide-ranging speech that lasted 47 minutes, and took in the “Responsibility Pact”, education, taxation, energy, and local government.

There was a glimmer of good news for household budgets, as he announced that, from January 2015, taxes for those making the least will be reduced, which he said will mean an extra €500 per year in the pockets of those concerned.

Businesses will have to wait a little longer. Mr Valls said that the standard rate of corporation tax will fall from 33% to 28% in 2020.

But he did give more details of the “Responsibility Pact” and announced the elimination of costs for the employer of an employee paid at the minimum wage from January 1, 2015.

He said the government will cut €50bn from the budget, but did not say how the cuts will be made - only where. State spending will fall €19bn, €10bn
will be cut from national health spending and €10bn savings will be found within local government.

And he announced proposals to simplify France’s complex tax system - including abolishing several “small taxes” which bring very little money - less than €100m a year - into government coffers. These include taxes on pinball machines and cross country skiing.

The number of regions in France, of which there are currently 27, will be halved, he said, declaring the complex French bureaucracy is a barrier to business. The new map of France will be published on January 1, 2017, he said.

Meanwhile, France will step up its “low-carbon strategy” for energy production by reducing consumption of fossil fuel by 30 percent and greenhouse gasses by 40 percent, he said. The French will also reduce their reliance on nuclear energy by 50 percent by 2025.

Mr Valls could not ignore the Socialists’ mauling in the recent local elections. He addressed it early in his speech, saying: “I heard their voices, I hear their silence.

He went on to say that he wanted to start “a fresh page” as the Socialist government enters the second stage of “a five-year period”.

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