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Macron tax cuts to benefit France's richest, study finds

© AFP/File | The government of new French President Emmanueal Macron has promised to deliver tax cuts worth around 11 billion euros for businesses and homeowners

PARIS (AFP) - 

The richest 10 percent of France's households will likely benefit the most from tax cuts proposed by the new centrist government of French President Emmanuel Macron, a study showed Wednesday.

The new government has promised to cut levies on businesses and individuals by roughly 11 billion euros ($12.6 billion) next year as part of a reform of taxes on the highest earners that is intended to spur investment and hiring.

The details of the changes are still being worked out by Prime Minister Edouard Philippe, who is struggling to deliver both tax cuts and reductions to public spending while respecting EU rules on budget deficits.

The respected French Economic Observatory at Sciences Po university in Paris issued a first assessment of the impact of the proposed tax cuts on Wednesday, saying that the top 10 percent of households would see 46 percent of the benefits.

The think-tank warned that "financing them by cutting public spending would significantly deepen the inequality produced by these measures."

Government spokesman Christophe Castaner admitted Wednesday that finalising the budget in 2018 would be even more difficult than this year when savings have been achieved by cutting foreign aid and transport infrastructure spending.

"This year was difficult, next year it will be even more so because we will add on the massive cuts in taxes paid by the French people and companies," he said.

French Prime Minister Edouard Philippe said in an address to parliament last week that France "cannot remain both the champion of public spending and the champion of taxation."

French Economic Observatory saw the economic prospects of France improving, with unemployment likely to fall from its current rate of around 10 percent to 7.6 percent by 2022.

Economic growth is set to average 1.6 percent over Macron's five years in office, it said.

Macron, 39, was elected in May running on a pro-business platform intended to encourage entrepreneurship in France, but critics accuse him of being too eager to please business owners.

© 2017 AFP