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What options for Macron in taming 'yellow vest' rebellion?

After already abandoning the anti-pollution fuel tax hikes that sparked the protests, what else can he do to defuse the anger of the 'yellow vests'?

Emmanuel Macron, President of France. Picture: United Nations Photo.

PARIS, France - French President Emmanuel Macron will address the nation on Monday night to announce a series of "concrete" measures aimed at ending the protests over taxes and inequality that have rocked the country over the past three weeks.

After already abandoning the anti-pollution fuel tax hikes that sparked the protests, what else can he do to defuse the anger of the "yellow vests"?

LEFTWARD LURCH?

The 40-year-old centrist, who was elected on a pledge to make the French economy more competitive, has until now insisted that he will not be swayed from his reform agenda.

But with the yellow vest movement showing little signs of abating, some in his government are calling for the former investment banker to tack to the left.

Foreign Minister Jean-Yves Le Drian, a former Socialist minister who jumped ship to Macron's camp, on Sunday called for a "new social contract" that would lay the foundations for a "21st-century welfare state".

But within the party, there are differences of opinion on how to improve the lot of the working poor and pensioners, who make up the bulk of the protesters.

LREM parliamentary chief Gilles Le Gendre argued against a break with the government's pro-business agenda.
"The main way of improving social justice and spending power is to ensure that the French can find work. The best spending power is a salary," he said.

TAX CUTS

Where consensus has emerged is on the need to further cut taxes on the struggling middle class.

France has the highest taxes of any wealthy country, according to an OECD report last week, which found the fiscal burden represented 46.2% of GDP last year.

In a first major concession to the demonstrators last week Macron cancelled a planned January increase in taxes on diesel and petrol that would have brought in 4 billion euros a year.

Economy Minister Bruno Le Maire on Monday said he wanted to accelerate the reduction of income tax and other taxes.

Among the proposals said to be under consideration are a cut in employee social security contributions on overtime and further cuts to lodging taxes, which were already lowered for some 60% of households this year.

KEEPING TABS ON SPENDING

The "yellow vests" have also called for an increase in the minimum wage.

But with an eye on the budget deficit, which it brought within an EU limit of 3% of GDP last year for the first time in a decade, the government is loath to incur any new expenditure.

Labour Minister Muriel Penicaud on Sunday ruled out an above-inflation increase to the minimum wage.

The limited spending measures said to be under consideration include an increase to the state pension top-up that had already been on the cards and a "mobility bonus" for those who have to rely on their cars for work.

Le Maire has suggested that companies could help pick up the slack, by paying workers a tax-free, end-of-year bonus, a proposal that has found few takers so far.

WEALTH TAX?

Macron's "cardinal sin" in the eyes of the "yellow vests" was to partially repeal a wealth tax to halt a tax flight of the rich and encourage them to invest in France.

Seen by the left as a sop to big earners, the measure -- which coincided with a tax hike on pensioners and cuts to housing benefits -- saw Macron dubbed the "president of the rich".

Despite demonstrators demanding the wealth tax be fully reinstated, Macron has vowed not to budge.

He could, however, announce plans for a review of the measure, to ensure it is indeed encouraging investment and job creation.

LEARNING TO LISTEN

Macron, who has already been accused of arrogance after a series of remarks seen as disparaging towards the poor, has already admitted to mistakes.

But many of the "yellow vests" are demanding his resignation.

Opposition leaders are calling instead for him to sacrifice his Prime Minister Edouard Philippe, a fiscal conservative whom he poached from the centre-right Republicans.

Appointing a new premier could allow Macron to start over with a new cabinet before European Parliament elections in May, but it might also be viewed as an admission of policy failings.

He may instead focus on trying to mend fences by inviting the yellow vests and other stakeholders to take part in a dialogue on how to green the economy and tackle social injustice.

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