French Government May Speed Up Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

12 October 2001

Both the Les Echos business daily and Le Monde newspapers have reported that French Finance Minister Laurent Fabius is considering bringing forward tax cuts, orginally planned for 2003, to next year in an attempt to help the French economy surmount the global economic slowdown.

The 'Juppe surcharge' is a levy on businesses on top of the usual corporate tax rate but it could be scrapped as early as 2002 as an emergency measure following the September 11 terrorist attacks in America which would result effectively in a reduction of corporate taxes from 36.6 per cent to 33.3 per cent. Les Echos said it is also possible that income tax rebate checks for around 8 million households on low income due in September next year could be sent out earlier to boost consumer spending.

However, PM Lionel Jospin's office has responded by claiming that it had not yet made any decision on expediting tax cuts or boosting the economy. 'This measure is clearly not part of our immediate plans, the prime minister has not settled on any measures to support the economy,' said a spokesman.

The Budget Bill was presented on September 18, but Fabius is due to address the National Assembly again next week on the 2002 budget. It is expected that any decision on taxation will be proposed at that time.

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