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By Crispian Balmer
PARIS, Feb 5 (Reuters) - The French government will scrap a costly local business tax in 2010 and is ready to consider cutting income tax in an effort to temper the impact of the economic crisis, President Nicolas Sarkozy said on Thursday.
Looking to defuse growing public anger over the slowdown, Sarkozy said he would meet union leaders on Feb. 18 to discuss a range of measures to help households and called on companies to give workers a larger share of the profits.
Some 1-to-2.5 million people took part in nationwide rallies last week to protest against Sarkozy's response to the crisis, which has so far focused on boosting public investment rather than giving direct help to consumers.
"I understand that people are worried. I hear them and I understand them," he said in an interview carried live on three major television channels.
But he ruled out an increase to the minimum wage or any generalised reduction in sales taxes, saying his major concern was to encourage economic growth and protect employment.
"If consumers don't spend, it's because they are fearful for their jobs," he said.
In an effort to convince companies to remain in France and not relocate to cheaper labour markets, Sarkozy promised to end the unpopular business tax known as the "taxe professionnelle" next year at a cost of some 8 billion euros ($10.25 billion).
"We will get rid of the 'taxe professionnelle' in 2010 because I want to keep factories in France," he said.
He added that the shortfall would have to be made up for local authorities, suggesting that other taxes, such as a carbon tax, could help cover the hole in their accounts but he promised to not to let France's mounting public debt get out of control.
UNEMPLOYMENT RISING
Headline unemployment in the euro zone's second largest economy passed the symbolic 2 million mark in October last year, jumped by 64,000 in November, the biggest leap since at least 1993, and rose by a further 45,800 in December.
Sarkozy's government has just put into motion a 26 billion euro ($33.9 billion) stimulus package that includes a mix of infrastructure projects, renovation work and investments aimed at keeping the stumbling economy from collapse.
The president said the world faced the worst economic crisis in a century and he laid the blame on banks and young traders in the major financial centres.
Strikers last week accused Sarkozy of giving millions to the banks to keep them afloat while doing nothing to help the poor.
The president rejected this, saying the government had lent banks 25 billion euros and promised that all the interest from these loans would go towards welfare and social handouts.
He said he was willing to discuss increasing family welfare or unemployment benefits. He also suggested cutting income tax the poorest paid, saying he wanted to protect the middle classes from the impact of the crisis.
The French president added that he wanted a broader share-out of company profits, saying he would like to see a third of profits handed out to employees, a third to the investors via dividends and a third going on investments.
The opposition Socialist party dismissed Sarkozy's latest attempt to cool tensions as a wasted opportunity and said he was blind to the problems faced by France.
"It is impossible to back a president who ignores the difficulty, brutality and harshness French people face in their everyday life," Socialist spokesman Benoit Hamon said. (Additional reporting by James Mackenzie and Anna Willard; editing by Michael Roddy)