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Published: Tuesday April 8, 2014 MYT 10:20:02 PM
Updated: Tuesday April 8, 2014 MYT 10:21:34 PM

France's Valls announces tax and spending cuts

PARIS (Reuters) - Manuel Valls used his first speech to parliament as France's prime minister on Tuesday to announce corporation tax cuts and outline public spending savings, saying Paris would respect EU budget commitments while rejecting austerity.

Confirming an expected package of 30 billion euros (24.61 billion pounds) in payroll tax cuts on companies by 2016, Valls said the so-called "C3S" tax on companies would be scrapped by the same date, handing a total six billion euros back to companies.

An existing surtax on the main corporation tax would be abolished in 2016 and the standard rate of corporation tax be cut to 28 percent from 33 percent by 2020, he said, adding that an initial reduction would take place in 2016.

On the public spending side, Valls said central government would bear around 19 billion euros of the total 50 billion euros in savings to be achieved by 2017, with local authorities and the health insurance fund each saving 10 billion euros.

Valls said France wanted to respect its promises to the European Union to bring down its public deficit but would not go down the path of austerity.

"We will explain that to our European partners," he said.

(Reporting by Mark John; Editing by Paul Taylor)

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