Taxing high earners aims to appease opposition from unions and the opposition socialist party, which has been against the increase in retirement age. But the government dismissed suggestions that the reform was an about face on France's pledge not to raise taxes to tackle public finances issues.
"It's more of a social milestone than a fiscal milestone," a French senior official told reporters at a briefing. "It's more about scrapping tax loopholes than raising taxes," the official said.
"The reform's been constructed in a way that limits social tensions. Instead of spectacular reform, they've opted for serenity," said Alexander Law, Chief Economist at French economic research group Xerfi. Law expects more reforms to come in the future and there is further to go before France's deficit problems are resolved.
"The 3% target for 2013 is still difficult to achieve, but it sends a sign to markets that France is willing to reform," said Nicolas Bouzou, economist at French think-tank Asteres. The pension reform is a relatively good compromise, even if it could have gone further, he added.
"What markets are waiting for, are austerity plans. We know those will come, but we don't have clear and massive commitments like those of Italy, and Germany especially," Xerfi's Law said.
Woerth said the reform isn't set in stone and he is ready to discuss it with unions and other parties before the proposal is formalized Friday.
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