Brussels, 07/09/2015 (Agence Europe) - In 2016, the French authorities are planning to pay for tax cuts out of additional budgetary savings.
The tax cuts of “slightly over two billion euros”, to be brought in in 2016, will affect “eight million households” and will be paid for “out of additional savings”, the French President François Hollande announced at a press conference in Paris on Monday 7 September.
How the reduction of the tax burden on the French, in 2016, would be paid for is an issue which has greatly perplexed the European Commission (see EUROPE 11380).
Referring to social security reform, Hollande argued that it was possible to make savings and social progress at the same time, particularly by means of new technology and administrative streamlining. In order to reassure local authorities concerned about their budgets, he announced that those which invest will share an additional envelope of one billion euros.
The French authorities are therefore going back on their commitment not to go any further than a reduction in public expenditure of €29 billion in 2016 and 2017 in the framework of their pledge to get on top of €50 billion of expenditure over the period 2015-2017 (see EUROPE 11296).
“There can be no question of increasing the public deficit”, said the French head of state, sticking to his word on budgetary consolidation and stimulating corporate investment ('responsibility pact'). The draft 2016 budget, which will be announced at the end of September to be submitted to the European Commission by mid-October, will therefore maintain the parameters of a target a deficit of “3.8% of GDP in 2015, 3.3% in 2016 to come below 3% in 2017”. It will also forecast growth in GDP to the order of “1.5% of GDP” for 2016, following a level of 1% this year. (Mathieu Bion)