French MPs back Emmanuel Macron's tax reforms

Former investment banker Macron (above) came to office in May promising to cut taxes, both for businesses and ordinary taxpayers.
Former investment banker Macron (above) came to office in May promising to cut taxes, both for businesses and ordinary taxpayers.PHOTO: EPA-EFE

PARIS (AFP) - French MPs on Tuesday (Oct 24) overwhelmingly approved President Emmanuel Macron's plans to slash a key wealth tax, over which he has been accused of pandering to the rich.

The lower house National Assembly, where Macron's party has a large majority, backed the move in a vote on a package of tax cuts included in the 2018 budget.

Former investment banker Macron came to office in May promising to cut taxes, both for businesses and ordinary taxpayers.

His move to exonerate financial investments from the wealth tax, making it only applicable to property, is seen by critics as proof that the self-proclaimed centrist leans more to the right on economic issues.

Macron has defended the measure - estimated to cost over €3 billion (S$4.8 billion) in lost revenue - as crucial to encouraging investment and halting the capital flight seen under his tax-happy Socialist predecessor Francois Hollande.

The government has argued that the budget, which include cuts to household taxes, will ultimately benefit all French people.

In total, it plans some €7 billion in tax cuts and €16 billion in spending cuts.

But its choices have been controversial.

Leftist critics have accused Macron of being soft on the rich for cutting their taxes while, at the same time, trimming student housing benefits.

Macron has made it his mission to bring France's deficit within an EU limit of 3 per cent of GDP for the first time in a decade.

From an expected 2.9 per cent of GDP this year he aims to further reduce the gap between revenue and spending to 2.6 per cent of GDP in 2018.