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French government will give tax cuts to middle class in effort to quell current unrest

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French government will give tax cuts to middle class in effort to quell current unrest
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REUTERS/Philippe Wojazer
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Emmanuel Macron has promised to reduce income taxes for the middle class in a move aimed at quelling "gilets jaunes" ("yellow vests") protesters.

But, to finance the change, government spending would have to be cut and the French might have to work longer to build up social contributions, he added.

France's president was announcing reforms drawn up after a three-month-long national debate on how the French want the country to change.

It was sparked by consecutive weekends of "gilets jaunes" protests, which began over a fuel tax hike but snowballed into a wider backlash against Macron.

Here are the main reforms he announced:

1. Improving democracy and push regionalism

Macron said he would improve democracy so that more French citizens were represented but rejected making voting mandatory.

One of the measures would be to use a referendum system more often and creating a citizens council that would take part in the National Assembly, France's parliament. From June, there will be 150 citizens elected at random that will be part of this council.

He said the French administration would be changed to make it more efficient and maintain public services in the countryside to "guarantee access for all health services and guarantee that no school or hospital be closed without the mayor's approval".

Macron also said it was important to "transfer democratic responsibility" to each region and break centralisation in Paris. To do this, the president plans to have more "people in the field" that can work and connect more easily with French people living in the countryside and remove some of the administrative posts in the capital.

He wishes to follow the "Canadian model" by regrouping all the services of the state in one place.

Macron also announced reforms to the public service by closing down some of the institutions that create a "bias", such as the ENA civil service school from which many high public servants have come from, including the French president.

2. Reduction of income tax for the middle class

In response to the "gilets jaunes" call for justice, Macron plans to "significantly" reduce income tax for the middle class that will be financed by removing some corporate tax loopholes, making people work more, and cutting public spending.

The tax cuts would be worth around five billion euros, announced the president.

However, Macron ruled out re-introducing the controversial ISF "fortune tax" — a sticking point for the gilets jaunes — because "it encourages investment".

He argued that "inequalities were not fiscal" but that they were "at birth". To combat them, Macron said he would reform the education system to have "human size" classes of no more than 24 students for children aged five to seven.

The president also wishes to give better training to teachers and make the profession "more attractive".

To help adults who need retraining, the government would create a higher education system for adults.

Macron said he would like the French to work more. "We have to work more, I've said it," he said. "France works a lot less than its neighbours. We have to have a real debate about this."

However, he noted that he did not want to push back the legal retirement age beyond the current threshold of 62. He also ruled out adding more hours to the work week or cutting the number of bank holidays.

But did outline a series of measures for French citizens to contribute longer to the pensions system before retiring.

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

3. Investment in big energy transitions

Macron plans on "going further" in energy policies and adapting methods that deliver more "concrete" results.

The citizens' council first task will be to find solutions to the environmental crisis, which will be put up for a vote in a referendum.

A council for the defence of the environment will take strategic decisions on the subject and make sure they were implemented by all the ministries.

But most of the work will be creating a "transitional" agenda to be implemented by 2025.

What else did Macron say?

Away from specific reforms, Macron said it was important to retain the "French democratic project".

Defending French values such as "laicite" (the equivalent of secularism) were paramount for the government, which is why Macron called for better control of borders and the national and European level.

He said that the Schengen Area, in its current state, did not "work anymore" and changes should be made even if it meant a reduction of its scope or fewer member states.

What has been the reaction?

Watch more reaction here

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