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France's Macron offers tax cuts as part of moves to quell 'yellow vest' unrest

Two years into his term in office, Macron is under pressure to quell nearly six months of "yellow vest" demonstrations that have brought weekly havoc to cities nationwide.

France's Macron offers tax cuts as part of moves to quell 'yellow vest' unrest
Image Courtesy: Reuters

PARIS: At the first major news conference of his presidency, Emmanuel Macron pledged tax cuts but said the French would also have to work more as he outlined his response to months of anti-government protests that have challenged his authority.

Two years into his term in office, Macron is under pressure to quell nearly six months of "yellow vest" demonstrations that have brought weekly havoc to cities nationwide. A first salvo of measures offered last December and worth 10 billion euros ($11.13 billion) failed to calm anger among low-income workers.

Forty-one year-old Macron, who has struggled to shake off the moniker "president of the rich" that links to his past as an investment banker, said he wanted a "significant" cut in income tax, which he said would be financed by closing loopholes some companies benefit from. He said government spending would also be squeezed and the French would have to work longer hours.

The tax cuts, which come at a time when France is battling to keep its budget deficit in check and stick to European Union rules, would be worth around 5 billion euros, he said.

"We must work more, I`ve said it before. France works much less than its neighbours. We need to have a real debate on this," Macron told an audience of journalists gathered in a gilded hall at the Elysee Palace, speaking from behind a desk.

With the `yellow vest` protesters frequently decrying the political establishment`s elitism, Macron said he also wanted to get the French more involved in the democratic process by making it easier to hold referendums on some issues.

A new push to decentralise government, breaking away from the historic `centrist` method where all is decided in Paris, would also be made within a year, and no more schools or hospitals would be closed without backing from the local mayor.

Although the number of demonstrators has declined since a peak in November, protesters clashed with police for a 23rd straight week last Saturday, with the sustained unrest having an draining effect on business, tourism and the economy. 

Thursday`s response is the result of a three-month long national debate, during which Macron rolled up his sleeves to discuss issues from high taxes to local democracy with groups of citizens at `town hall` meetings around the country. Dubbed the "great debate", it also involved one meeting where he stayed up debating issues of state with philosophers until after midnight.

Despite the criticism levelled at him, and opinion poll ratings that have fallen to around 30 percent, Macron stuck to his guns on his policy platform on Thursday, saying his government had already implemented many reforms and would go on. 

"I asked myself: Should we stop everything that was done over the past two years? Did we take a wrong turn? I believe quite the opposite," he said. 

The `yellow vest` street rebellion erupted over planned diesel tax hikes last November, but quickly morphed into a broader backlash against inequality and a political elite perceived as having lost touch with ordinary voters. 

Macron, who swept to power promising to "transform France" and "make work pay", has seen his ambitious reform agenda derailed -- or at least knocked off target -- by the unrest. Pension and unemployment insurance reforms planned for 2019 have made little progress so far. 

Macron said that the pension reform would be presented to cabinet this summer and that future increases in the lowest pensions would be indexed to inflation, another effort to provide lower-income workers with some succour.