French Socialists back away from contentious savings tax

Paris (AFP) - France's Socialist government on Sunday backed away from plans to increases taxes on popular savings programmes, after the move sparked anger among savers.

The plan would have harmonised tax rates on interest from several kinds of savings plans at 15.5 percent, raising an extra 600 million euros ($830 million) in revenues to help France rein in its budget deficit.

It was approved as part of a budget vote in the lower house National Assembly last week but came under fire from groups representing savers, the right-wing opposition and even some Socialists.

Budget Minister Bernard Cazeneuve announced in Le Journal du Dimanche that the government had dropped the plan and the tax increase would apply only to certain life insurance policies.

"We have heard the concerns of small savers," Finance Minister Pierre Moscovici said on Europe 1 radio.

The controversy came amid growing discontent in France at tax rises imposed so the government can meet an EU-mandated deadline of 2015 to bring the state deficit below three percent of gross domestic product.

French football clubs have announced plans to go on strike next month to protest plans to tax top earners 75 percent and on Saturday police clashed with protesters in Brittany opposed to a new tax on commercial road transport.