New French PM vows tax cuts

French Prime Minister Manuel Valls outlined a series of tax and budget cuts during a speech before parliament on Tuesday, his first since taking office last week. The ruling Socialist Party was hit by heavy losses in recent municipal elections, a sign of national discontent with President Francois Hollande's failure to lead the country to economic recovery. The outcome of the vote prompted Prime Minister Jean-Marc Ayrault to dissolve the government and resign. Hollande then selected Valls, the interior minister at the time who also enjoyed popularity in France, to take on premiership.

France has had "too much suffering and not enough hope," Valls told parliament on Tuesday.

In late March, voters shifted support away from Hollande's Socialist Party, resulting in historic gains for center-right opposition party the Union for Popular Movement (UMP), the party of former President Nicolas Sarkozy. The far-right National Front (FN) also enjoyed success in the municipal polls.

Included in the new premier's proposals on Tuesday were measures that would see payroll tax cuts for companies worth roughly 30 billion euros ($41 billion) by 2016. By the same year, some corporations would begin seeing their tax rates drop from 33 percent to 28 percent. All remaining companies would benefit from that tax cut by 2020 at the latest.

"Supporting companies is supporting employment, investment and exports," he said.

The government would grant "modest households" tax cuts worth roughly 5 billion euros.

In a move to rejuvenate employment, the new government planned to implement 50 billion euros in budget cuts by 2017, beginning with reductions of 19 billion euros to state spending, 10 billion to health insurance and an additional 10 billion to local governments, Valls said.

"I am for respecting our commitments, for budget responsibility, not for austerity," the new prime minister said. "Of course, we must straighten up our public finances but not by destroying our social model or our public services."

Unemployment has hovered around 10 percent in France for the past five years, while the public deficit has exceeded the EU limit of 3 percent since 2007. President Hollande's failure to reverse the country's economic course by raising taxes on the wealthy has caused his approval rating to plummet to 17 percent, according to the Associated Press news agency.

kms/hc (AP, AFP, Reuters)