France

France this year followed - but not very deeply - the Europewide tax-cutting trend. Between 2001 and 2003, the Finance Minister, Mr Laurent Fabius, intends to give Ffr 120 billion (€17.9 billion) back to taxpayers, of which the single biggest chunk will be Ffr 45 billion (€6.71 billion) in income tax. This year's budget totals more than Ffr 1,600 billion (€239 billion) and economic growth is expected to reach 3.3 per cent.

Company taxes are being reduced from 36.33 per cent this year to 33.33 per cent in 2003. Mr Fabius is more generous to small companies, whose base rate is to fall from 25 per cent to 15 per cent over the next three years.

Mr Fabius's tax plan was not well received. There is no PAYE system in France and a significant proportion of the population pay no income tax. Few of the Communist and Socialist "plural left" who in theory form Mr Fabius's constituency will benefit from the income tax cuts, which offer some relief to those paying top rates. The left is pushing for higher social spending - not tax cuts - and the Greens have been promised higher energy taxes.

Mr Fabius recently made a trip to the Peugeot museum in Sochaux, eastern France, to bury a "vignette" (sticker), symbol of the car tax, which was abolished this year. Last April, he reduced VAT from 20.6 to 19.5 per cent with a special provision cutting VAT on home improvements to 5.5 per cent.