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French PM unveils tax cuts, pension reforms as Macron eyes rebound

AFP file photo | Prime Minister Édouard Philippe details the government's reform agenda in an address to lawmakers in the National Assembly, June 12, 2019.

France’s prime minister has mapped out the government’s reform agenda in an address to parliament as President Emmanuel Macron seeks to rebuild momentum behind his measures to shake up the economy now that Yellow Vest protests are abating.

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In a speech to France’s National Assembly on Wednesday, Prime Minister Édouard Philippe promised a “profound change of method” as he outlined a set of measures – including tax cuts and changes to unemployment benefits – to be enacted over the remaining three years of Macron’s presidency.

France’s pro-business president is seeking to breathe new life into his plans to overhaul France’s economy now that Yellow Vest protests against him are ebbing and that his popularity is picking up.

Confirming a pledge made by Macron earlier this year, Philippe told lawmakers that the government would cut income tax for middle-class workers and would completely scrap a housing tax that had already been reduced since Macron’s election in May 2017.

Philippe said unemployment benefits for the highest earners would gradually decrease to encourage the jobless to get back to work more quickly. He also said companies hiring workers would be offered incentives to phase out short-term contracts, which are common in France.

On the highly sensitive subject of pension reform, Philippe said the government would create incentives for the French to stay on the job longer than the current minimum legal retirement age of 62.

"As the president said, we must work longer," he told lawmakers. "We will maintain the possibility to retire at 62, but we will define a pivot age and incentives to work longer," he said.

These changes are potentially explosive, in a country where millions of protesters have marched against past changes to the pension age.So is a change to bioethics legislation that would pave the way for all women, including lesbian couples, to be allowed to use medically assisted methods to have children.

The French prime minister also outlined a list of green measures, including a 100 percent plastic recycling target, as he promised to place ecology “at the heart" of the government’s reform drive.

'Over the next twelve months, we will accelerate our environmental measures,' Philippe tells French lawmakers

‘Death valley’

Some of the measures were already key planks of Macron's modernisation programme, but had been postponed by six months of demonstrations. The Yellow Vest movement, which started as a revolt against fuel taxes, morphed into a broader opposition to Macron's presidency – the biggest challenge since he took power in May 2017.

Macron said last week the crisis hit just as he went through a critical "death valley" phase, when his reforms were yet to yield results.

"When you start reforms, until the point where you have concrete results for people, you have to go through the death valley," Macron told bankers gathered at the International Monetary Conference in Paris. "It was in the middle of this death valley that we were attacked."

Macron is hopeful he can put his agenda back on track, with the number of Yellow Vest protesters falling sharply in recent weeks. The collapse in last month's European elections of Macron’s mainstream political competitors – the Socialists and, in particular, the conservative Les Républicains – has also boosted morale at the Élysée Palace.

While still low, Macron's popularity ratings have picked up since the vote, up five points to 32 per cent in the latest Elabe poll for Les Echos newspaper, a level unseen since last summer. A string of good economic news, including a dip in the number of jobless and higher consumer and business morale, has also lifted the president's spirits.

(FRANCE 24 with AFP, REUTERS)

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