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French MPs back Macron's tax reforms

media French President Emmanuel Macron (R) looks on as he stands alongside Labour Minister Muriel Penicaud (C) and Minister of Education Jean-Michel Blanquer (L) during a visit to The School of Application to the Trades of Public Works (EATP). REUTERS/Ludovic Marin/Pool

French MPs on Tuesday overwhelmingly approved President Emmanuel Macron's plans to slash a key wealth tax, over which he has been accused of pandering to the rich.

The lower house National Assembly, where Macron's party has a large majority, backed the move in a vote on a package of tax cuts included in the 2018 budget.

Former investment banker Macron came to office in May promising to cut taxes, both for businesses and ordinary taxpayers.

His move to exonerate financial investments from the wealth tax, making it only applicable to property, is seen by critics as proof that the self-proclaimed centrist leans more to the right on economic issues.

Macron has defended the measure -- estimated to cost over 3 billion euros ($3.5 billion) in lost revenue -- as crucial to encouraging investment and halting the capital flight seen under his tax-happy Socialist predecessor Francois Hollande.

The government has argued that the budget, which include cuts to household taxes, will ultimately benefit all French people.

In total, it plans some seven billion euros ($8.2 billion) in tax cuts and 16 billion euros in spending cuts.

But its choices have been controversial.

Leftist critics have accused Macron of being soft on the rich for cutting their taxes while, at the same time, trimming student housing benefits.

Macron has made it his mission to bring France's deficit within an EU limit of 3 percent of GDP for the first time in a decade.

From an expected 2.9 percent of GDP this year he aims to further reduce the gap between revenue and spending to 2.6 percent of GDP in 2018.

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