Tax breaks to help low incomes

SCRAPPING taxe professionnelle in 2010 and removing the first income tax band were among proposals made by President Sarkozy in a televised interview about the economy last night.

He said next year taxe professionnelle, already trimmed down by the government in December 2008, would be cancelled across all sectors.

If current bandings remain the same, individuals could earn up to €11,673 free of income tax if the first band is scrapped.

The president said that this was a crisis of a kind not seen for a century. He outlined a series of ideas which will be discussed with unions and employers’ representatives on February 18.

The president said that the interest on loans made to banks would be put to use to help the poorest.

He said he was thinking of removing the first income tax band – income from €5,852 to €11,673 and added that he was considering increasing family allowance and creating a new state-paid version of the chèque emploi service universel (cesu) which single parents or single elderly people could use to pay for help at home.

He said the state would “better protect” young people at the end of a temporary work contract who could not get another job because of the crisis and added he would boost payments for temporary lay-offs ( le chômage partiel) - a measure bosses can invoke when firms are temporarily struggling.

Benefits paid to employees laid-off temporarily already went from 50% to 60% of salaries in December.

Sarkozy said he wanted to reform the way financial traders are paid and added he found current salaries “shocking.”

He also wanted to examine the issue of firms passing on profits to employees, not just to shareholders.

Cour des Comptes president Philippe Séguin will be asked to carry out an inquiry into how banks are using funds allocated to them.

On the issue of tax havens, the president said France should take a fresh look at its relations with Andorra and Monaco.

The interview, which was screened on three TV channels was watched by 15 million people.

Opposition Socialists and centrist party MoDem said the measures were insufficient and a number of unions said they were disappointed by the proposals. CFDT leader Marcel Grignard said there were “very few concrete ideas.”