Bizwatch

Tax Americana
French President Jacques Chirac may be the anti–George W. Bush in foreign policy, but when it comes to lowering taxes, the two leaders are of one mind. Chirac is renewing his push to slash French income tax by 30% before 2007 — a promise from his 2002 campaign.

INDICATORS Back In Business In a test of investors' appetite for Russia in the wake of the Yukos crackdown, real estate-to-telecom conglomerate Sistema raised $1.35 billion through an initial public offering in London, the largest ever by a Russian firm. Sending a Message Thirteen E.U. countries agreed to greater cross-border cooperation in the battle against "spam" e-mails. Meanwhile, Pfizer joined with Microsoft to file suits against two spam operations accused of selling illegal versions of the drug company's Viagra. Upstream Battle Norway and Chile launched a challenge to E.U. import restrictions on farmed salmon at the World Trade Organization. Brussels triggered the measures after British and Irish farmers complained rivals were selling the fish below cost price. Flattened And Packed Ikea's new North London store — Britain's largest — had to close 40 minutes after its grand opening when several people were injured in a stampede for cheap furniture.

With previous cuts totaling only 10% and sluggish growth eroding revenues, Chirac is looking to new Finance Minister Hervé Gaymard to work some magic. Last week, Gaymard pledged tax cuts in 2006 and 2007 and vowed to sell stakes worth nearly 320 billion in state firms including nuclear-power company Areva and utility mammoth Electricité de France. That, Gaymard hopes, will stimulate economic growth that, at 2.3% in 2004, was below government estimates of 2.5%. Surprisingly, Gaymard is predicting the same for this year. "Given commodity prices like oil rising, we should count on lower growth next year, not higher," says David Naudé, senior euro-zone economist for Deutsche Bank in Paris, which forecasts 2% in 2005. Gaymard's other idea for encouraging growth: sparking consumer spending with his tax cuts. Sounds like supply-side thinking, American style.

Merge or Purge?
The consumer-products industry seems to be on a binge-purge cycle. After Procter & Gamble last month gobbled up Gillette for $57 billion, it looked like bulking up was the new fad. But its rival Sara Lee went on a crash diet last week, unveiling plans to spin off or sell a string of businesses — including Meats Europe, its packaged-meat division that houses the Aoste brand — worth around 40% of the firm's revenues. Investors liked the slimmed-down look; shares climbed 4% on the news. Where does that leave rival Unilever? The Anglo-Dutch titan last week announced a 36% slide in pretax profits for 2004. "They need to re-establish a little bit of momentum" before trimming fat, says Andrew Wood of U.S. investment-research firm Sanford C. Bernstein. But don't expect major weight gain. Unilever first needs "to sort its own problems out," he says. Either way, their bankers' coffers will likely swell. — By Adam Smith

The Bottom Line
	It is complex for no real reason except history.
		DENIS DOUTE, vice president of France's SNCF freight network, on the difficulties of implementing a plan to streamline rail-freight delivery between France and Germany