Raffarin Reaffirms French Taxation Policy

by Ulrika Lomas, Tax-News.com, Brussels

21 July 2003

French Prime Minister Jean-Pierre Raffarin has pledged to continue the government's policy of cutting taxes in order to stimulate economic growth and will attempt to control the nation's budget deficit with "economies in state spending."

In a recent speech given in Epinal, France, the Prime Minister declared: "I must today face up to budget difficulties, of which I make no secret," adding that government spending will be prioritised to those area that are in most need, mainly unemployment and crime.

Raffarin remarked that under current French tax policy, "growth will return" and he was not prepared to countenance the idea of tax hikes, saying "all elements" for a return to economic growth are in place, which he forecasts will be near 2.5% in the six months between September and March.

Raffarin's message is unlikely to please Brussels who would rather the French concentrate on getting their budget deficit back below 3% of GDP as set out in the Growth and Stability Pact rules governing the stability of the single currency.

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