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Chirac pledges tax

cuts in two years

AMIENS, France: French President Jacques Chirac on Friday reiterated pledges to start lowering taxes in two years' time but said draconian cuts in public spending were needed first.

"We should probably be able to re-establish our financial balance within two years and begin lowering taxes on producers and consumers," he said while touring the Somme region of northern France.

"We must be draconian in reducing spending during this period if we want to reach a balance that will enable us to reduce charges weighing on everyone," he said after a meeting with local economic officials in the town of Amiens.

"In France we have reached a level of charges, both on households and on companies, that is completely excessive," he said. France needs to set its public finances in order partly to qualify for a planned single European currency from 1999.

Conservative Chirac, who won election last year on promises of waging a war on unemployment, said in November that two years of austerity were needed first to enable France to achieve a longer-term goal of creating jobs.

He praised Prime Minister Alain Juppe, saying the government had "embarked on a thankless and difficult path. I'm sure it will not sway from it."

Juppe's plans to overhaul the welfare state, for instance, part of a wider assault on France's budget deficits, sparked 24 days of public sector strikes last year.

In an interview with the weekly Le Point, Juppe said he would stay on course with reforms. Fiscal reforms would be presented in the 1997 budget as a five-year tax reduction plan, he said.

Chirac said that high tax levels and a wide budget deficit in France were caused by "laxism in managing our public revenues and an absence of responsibility".

"We will need...a change of mentality, I would almost say a cultural revolution, to understand that money taken from the taxpayer...must be spent with a constant concern of doing it in the most efficient way possible," he said.-Reuter