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France's Hollande to ease entrepreneurs' capital gains tax

French President Francois Hollande attends as he arrives to meet Italy's Prime Minister Mario Monti at the Villa Madama in Rome September 4,
French President Francois Hollande attends as he arrives to meet Italy's Prime Minister Mario Monti at the Villa Madama in Rome September 4,

PARIS (Reuters) - President Francois Hollande will propose next week easing entrepreneurs' capital gains tax, an official in his office told French media on Friday, as the Socialist leader struggles to win the confidence of business owners.

Hollande's government had planned last year to raise capital gains tax on business owners early in its mandate, but backed down after a high-profile revolt and warnings the move would drive start-up companies abroad.

But the episode, and increases in other business taxes, have created a climate of mistrust for the government among business owners at a time when leaders need them to help kick-start the stagnant economy and create jobs.

Eager to dispel the bad blood, Hollande is set to announce plans to reduce the taxable amount of their capital gains by up to 65 percent, Les Echos business newspaper reported on its website on Friday.

Under special cases such as a business owner retiring, the deduction could reach as much as 85 percent, the daily said.

The presidency official did not confirm the numbers but insisted that Hollande wanted to encourage businesses to be set up and help risk-taking investors that finance new firms.

With the thinnest profit margins in the euro zone, corporate confidence has fallen to levels not seen since the 2008-2009 financial crisis as firms face plunging demand and high taxes.

Hollande's Socialist government is struggling to win back corporate France's confidence, with many business people fearing more tax hikes are in store as the state battles to bring down its budget deficit.

Prime Minister Jean-Marc Ayrault acknowledged last week that the government's flagship measure for companies, a tax credit aimed at cutting their wage bill indirectly, had received a tepid reception so far.

(Reporting by Elizabeth Pineau; Writing by Leigh Thomas)

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