French 2016 budget promises tax cuts

French 2016 budget promises tax cuts

30th September 2015, Comments 0 comments

The French government unveiled its 2016 budget on Wednesday with a plan to reduce taxes while also cutting its public deficit, with an eye on the presidential election the year after.

Income tax will be cut by two billion euros ($2.23 billion) in 2016, in line with President Francois Hollande's promise last month to cut taxes "whatever happens".

Hollande introduced around 18 billion euros of tax rises at the start of his presidency in 2012, with many of the measures targeting the wealthiest households and biggest corporations.

The tax hikes were one reason for the president's slide in popularity.

Despite cutting taxes by one billion euros in 2014 and by 3.2 billion euros this year, support for Hollande has never really recovered.

The government also announced measures to improve competitiveness in a bid to attack the other issue that has dogged Hollande's presidency -- stubbornly high unemployment, with the jobless total currently standing at around 3.57 million people.

The value of the package of tax cuts and reductions in contributions will rise from 24 billion euros in 2015 to 33 billion euros in 2016 and 41 billion euros in 2017.

But France, which has repeatedly missed its fiscal targets, has also made commitments to the European Union to get its deficit below the bloc's three-percent cap.

The budget makes a step towards that goal, projecting that the deficit will be cut from 3.8 percent to 3.3 percent.

To achieve that, the government forecasts 1.5 percent growth next year, compared with 1.0 percent in 2015, a goal which the independent body that analyses budget forecasts believes is "achievable".

Public spending will be slimmed down, with 16 billion euros of tax cuts now planned, compared to the 14.5 billion euros initially planned.

© 2015 AFP

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