Sep 30, 7:16 AM EDT

France to cut corporate, income taxes in 2016 budget

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PARIS (AP) -- The French government will cut taxes for a total of 11 billion euros ($12.3 billion) next year, according to budget plans that aim to loosen up an economy burdened with high unemployment and weak growth.

The budget detailed Wednesday in a Cabinet meeting is the first under President Francois Hollande to meet the government's deficit targets.

The government plans 9 billion euros in corporate tax breaks to boost hiring and investment. The amount is part of a 40 billion euros plan staggered from 2014 to 2017 to support French business. Income taxes will be cut by 2 billion euros.

The budget is a "confirmation" that the government intends to "put public finances in order", the government spokesman Stephane Le Foll said Wednesday.

France is trying to bring the deficit within the EU limit of 3 percent of gross domestic product by 2017. The 2016 budget estimates a deficit of 3.3 percent next year, down from 3.8 percent this year.

Since Hollande's election in 2012, EU authorities have allowed France to twice delay the date by which it would bring its deficit within the EU target.

This month, Moody's Investor Service downgraded the credit rating of France from Aa1 to Aa2, its third-highest possible rating. The ratings agency explained that "French economic growth will remain low over the medium term," which will make it harder to heal public finances.

The budget plans are based on expectations that the economy, the second-largest in the 19-country eurozone, will grow by 1.5 percent next year, up from about 1 percent this year.

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