Prime Minister Dominique de Villepin on Thursday promised a major overhaul of France's tax system and a resumption of income tax cuts to try to revive the economy and win back public confidence.
Laying out his economic plans after three months in office, Villepin hailed a drop in unemployment as a good first step, but said much more must be done and offered new financial incentives to encourage unemployed people to go out and find work.
"I want to promote growth, which helps everyone, which restores French people's purchasing power, which generates jobs," he told a news conference.
"I want it to be more attractive and easier to work in France than to live on welfare."
Villepin, widely seen as a potential presidential contender in 2007 elections, unveiled something for everyone in a programme intended to help boost economic growth and revive the conservative government's sagging fortunes.
But he also repeated a pledge to respect the European Union budget deficit limit, which Paris has broken every year since 2002.
The middle classes are intended to be the main beneficiaries of the tax reforms. The system will be simplified to make it more transparent and income tax cuts that were frozen this year will be resumed on 2006 revenues.
Villepin also promised several million low-income households a 75-euro ($91.49) cheque to help cope with the surge in energy costs following oil prices' rise to record highs.
He gave himself 100 days on taking office to improve consumer confidence, sapped after voters defied the government by rejecting the EU constitution in May, and made creating jobs and boosting growth his main priorities.
He said July's fall in unemployment to below 10 percent for the first time in nearly two years was only a start, but added: "These results prove that we can win the battle for employment."
The major theme of Villepin's last monthly news conference - an "economic patriotism" that would shield strategic French firms from unwanted take-over - got no more than a passing mention as plans to simplify the tax system took centre stage.
Justice, economic efficiency and simplicity were the buzz words as the prime minister focused on plans to cut the number of brackets for taxable income by a third to four, and said tax cuts would resume in 2006 at a cost of up to 3.5 billion euros.
A single person earning 30,000 euros a year would have a 15 percent tax cut, he said.
"The reduction in income taxes will resume on 2006 revenues as part of a major fiscal reform which our country needs for a better recognition of labour, for economic competitiveness and for purchasing power," he said.
President Jacques Chirac promised in his 2002 election campaign to reduce income tax by 30 percent by the end of his 5-year term. But it has so far been cut by only about 10 percent as France battled to limit a budget deficit above EU limits, and there is now little or no chance of Chirac achieving his target.
Villepin also unveiled tax breaks designed to encourage French shareholders to remain loyal to domestic firms, including lower capital gains tax the longer an investor holds shares.
He said this would be one of French firms' best defences against hostile take-over bids.
Villepin remained under fire from trade unions, who have threatened protests this autumn over pay and conditions.
"The major reduction in public spending and privatisations will inevitably weigh on the public service and jobs," the Force Ouvriere union said.
Villepin's chances of running for president in 2007 will depend largely on his battle to revive the economy, which the government says will grow by 1.5 to 2.0 percent this year after 2.1 percent in 2004.
Asked about his possible presidential ambitions, Villepin said he was concentrating fully on his job as prime minister.
"We are in a difficult time, a difficult situation. All my energy, all that of the government, will be dedicated to the interests of our compatriots," he said.
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