World Economy

Hollande Promises $2b in Tax Relief

Hollande Promises $2b in Tax ReliefHollande Promises $2b in Tax Relief

French President Francois Hollande pledged a new round of tax cuts next year worth €2 billion ($2.23 billion) as he battles to cut high unemployment and win back voters ahead of a 2017 presidential election.

In a wide-ranging two-hour news conference, Hollande said that growth was picking up in the eurozone’s second-biggest economy, but not enough to cut unemployment, Reuters reported.

Hollande has set a durable turnaround in France’s unemployment, currently close to record levels over 10%, as a condition for seeking a second mandate.

Raging unemployment and stiff tax increases that were introduced at the start of his five-year term in 2012 have made the Socialist leader deeply unpopular with many voters.

If the next presidential election were held now, he would not make it to a runoff round, losing out to conservative challenger and far-right leader Marine Le Pen, according to an Ifop poll for RTL and Le Figaro released on Sunday.

Hollande already trimmed taxes for more than nine million of France’s poorest households last year and those planned for 2016 would benefit eight million.

“The tax-cut policy that was started in 2014 and increased this year will continue in 2016 ... more than €2 billion will be devoted to it,” Hollande said.

The cuts would be financed by squeezing more savings from the budget elsewhere in order to respect the government’s pledges to EU partners to cut its public deficit to 3.3% of economic output next year from an estimated 3.8% this year, Hollande said.

The public finances are benefiting from improving growth, which Hollande said would top 1% this year and reach 1.5% next year, even though it would not be enough to cut unemployment.

Hollande pledged a reform of France’s complicated labor code, which many firms say discourages hiring, to give workers and companies more freedom to negotiate work conditions rather than imposing top-down rules on them limiting flexibility.

However, he ruled out changing France’s 35-hour work week, even though recent polls have suggested that a majority of French people would favor.