Macron Dangles Tax Cuts to Reboot his Presidency: Is It Enough?

(Bloomberg) -- Emmanuel Macron promised a new wave of tax cuts for France’s middle classes as he sought to placate Yellow Vest protesters and reinvigorate his flagging presidency.

After almost six months of often violent demonstrations, this was meant to be the moment when the 41-year-old leader would show he had heard the grievances and had a solution. What he offered was a mixture of defiance -- digging in on his pro-business overhauls -- and some soul-searching -- “I’ve learned a lot” -- that early polling shows has failed to move voters.

“I have felt in my bones what French people are going through and I want to provide an answer,’’ Macron said. “The art of being French is being rooted and universal, attached to history and origins but embracing the future.”

Macron Dangles Tax Cuts to Reboot his Presidency: Is It Enough?
Macron Dangles Tax Cuts to Reboot his Presidency: Is It Enough?

It was a highly choreographed affair: a news conference stretching over two hours in a gilded hall at the Elysee Palace. The event had been delayed by the fire at Notre Dame Cathedral in Paris that brought the nation briefly together.

Yet, the culmination of the national debate -- as he dubbed his two-month engagement with citizens around the country -- seemed to offer little that was exciting or surprising to them. Voters were disappointed by the package, with 63 percent of respondents saying they were unconvinced in a poll by Harris Interactive and Agence Epoka.

On Offer

There was another 5 billion euros ($5.6 billion) of cuts to income tax and Macron said he would peg any state pensions under 2,000 euros a month to the rate of inflation from 2020. Macron said the measures would be paid for by closing tax breaks for companies and incentives for people to work for longer.

Finance Minister Bruno Le Maire suggested those details haven’t been properly nailed down yet though. In a Friday interview on LCI television, he pledged to cut spending to finance the tax cuts.

“Every euro of reduction in income tax should be financed by a one euro cut in public spending,” he said.

Macron dug in by not retracting painful reforms, but he pledged to do more to make his agenda more human and do a better job of protecting the nation’s citizens from globalization. The tax announcements, the most novel aspect of the package, mark a further shift in favor of consumers over businesses.

Macron Dangles Tax Cuts to Reboot his Presidency: Is It Enough?

Other announcements ranged from promises to revamp the mechanics of the French state, to reforms of education. He even said he’ll scrap the elite school ENA -- where he himself studied -- in order to make the upper echelons of the French system more accessible.

Almost two years after coming to power, Macron’s promise of deep reforms to jolt France’s economy and labor market have collided with protests that began with opposition to gasoline taxes before morphing into a general unrest over purchasing power and Macron’s governing style.

The president dodged the question of whether he will run for re-election in 2022, saying he is “furiously and passionately” focused on making his first time a success.

Other Key Measures

  • Proportional election for around 20 percent of seats in parliament
  • More power for mayors and regions from 2020
  • No closures of schools of hospitals without the agreement of local mayors
  • Limits for primary school class sizes and provisions to make the teaching profession more attractive

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