PARIS, Nov 1 (Reuters) - French President Nicolas Sarkozy faced fresh discontent from within his party on Sunday when a group of senators said they would not approve his plan to scrap a business tax.

Sarkozy has run into domestic headwinds in recent weeks after gaffes that have embarrassed and angered senior members of the centre-right UMP party making them hostile to his reforms.

Partially scrapping the tax is a key initiative of the government's 2010 budget and the opposition from the 24 senators makes it harder to get the measure approved in its current form.

The reform of the "taxe professionelle" is part of wider efforts to boost French competitiveness and attract businesses wary of France's reputation for high taxes.

Firms are expected to save around 12 billion euros (S$24.8 billion) from the move but it will be costly for local authorities, for which it is a major source of funding. It will partly be replaced by a new local tax.

"The current proposal is neither clear, fair or in line with our beliefs as elected officials with local roots," former Prime Minister Jean-Pierre Raffarin said in a statement printed in the Journal du Dimanche newspaper and signed by the others.

The budget is being considered in the lower house of parliament, the National Assembly, where the tax proposal had to be rewritten because of opposition.

Sarkozy's party has a comfortable majority in the lower house but his advantage is smaller in the Senate which is
expected to discuss the budget at the end of November.

A source in Sarkozy's office played down the senators' concerns, saying the plan could be modified.

"The text is being discussed, it will be modified in the Senate as it already was in the Assembly," the source said.
Nevertheless, the complaints are yet another sign of mounting troubles for Sarkozy that have hurt his poll ratings.

Outcry over a job for his son, sex tourism revelations of the culture minister, and accusations that he tried to sway acourt case have also upset his supporters.