Nicolas Sarkozy, the ruling center-right UMP’s newly nominated candidate, said at the weekend he wanted to reduce the ceiling for all the direct taxes an individual pays combined to 50 percent of revenues from the current 60 percent.

He promised that firms which invested and created jobs would pay lower taxes on their profits and has said in the past he would exempt overtime from taxes and social security charges.

The opposition Socialist Party’s candidate Segolene Royal is seen as more inclined to follow a redistributive income tax policy, even though she has distanced herself from the head of the party, Francois Hollande, who last week proposed tax increases for workers earning more than 4,000 euros a month.

“The Socialists seem to be willing to increase spending in a number of areas while Sarkozy wants to cut the weight of the state in the economy so there are definitely different approaches,” said Dominique Barbet, economist at BNP Paribas.

“The market will prefer Sarkozy’s approach but it is not obvious that this will be the case for French voters. They will pay attention to the tax plans but will also look at the plans for public services, social and health care.”

French voters’ primary concerns are employment, purchasing power, and salaries, followed by education, according to a recent Ifop poll and Sarkozy and Royal are vying with each other to address these issues.

Royal has said she wants to avoid any increase in tax and social security contributions, cut the budget deficit, finance priorities in the field of social affairs and re-examine the fiscal benefits enjoyed by the most well off.

“There will not be any new taxes that could be interpreted as a factor that could discourage work or effort,” she said on Friday.

While she has not specified how she plans to reconcile these aims, she has appointed Dominique Strauss-Kahn, a former finance minister and her erstwhile rival aspirant to be the Socialists’ presidential candidate, to draw up proposals.

Sarkozy also wants to get people to work and summed up his spending and tax plans this weekend by saying: “Anything is better than taxing a working man.”

“We do not want France to become a country of state aid recipients, we want France to be a country of creators, entrepreneurs,” he added.

Both presidential candidates have also affirmed their commitment to improving the health of public finances and analysts say this is already a break with tradition.

“What is interesting is that if you look at both candidates, we see that there is explicitly or implicitly a target of controlling the public deficit and reducing public debt,” said BNP Paribas’ Barbet.

“That is something that is positive and quite new compared with past election campaigns.”

Financial markets’ knee-jerk reaction may still be to prefer Sarkozy, not least as he has been part of a government which has managed to cut France’s budget deficit to below the European Union limit for the first time since 2001.

But French analysts said there could be little difference between him and his Socialist rival when it comes to the budgetary impact of their policies.

“There are clear differences with the Socialists much more reluctant to cut taxes than the UMP but there may not be such a big difference in the deficit at the end of the day,” said David Naude, senior economist at Deutsche Bank in Paris.

“Sarkozy has adopted a strong stance on the need to cut the deficit but having more tax cuts pencilled in means that the end result may not be that different from Royal who has more spending but fewer tax cuts.”

Independent costings of Sarkozy’s tax plans are hard to come by but Les Echos newspaper cited the UMP as estimating his proposal to cap combined direct taxes at 50 percent of revenues would have a price tag of about 500 million euros per year.

Alain Lambert, a Sarkozy adviser, was also quoted by Le Parisien newspaper as mooting the idea of following the German model by raising value-added taxes as a trade-off for cutting tax rates for firms and workers.

Even so, analysts said they were waiting for more hard details on how Sarkozy’s tax cut promises will be funded.

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