Tax decrease in 2016: the promise that surprised Bercy – Les Echos

So far, Francois Hollande put a serious condition for continued tax cuts for French in 2016. “Depending on the capabilities of our economy” he said July 14. “If growth amplifies” , he again repeated in an interview published Thursday by the regional dailies Ebra group. This condition, the head of state himself has lifted several hours later. “There will be tax cuts whatever happens in 2016,” said he announced his arrival in Sannesage, in Isère, yet spent for a retraction movement in the promotion of “big law” , he said, the energy transition.

Fade tax ras-le-bol still alive

One way to take time for the presidential 2017. And to show that the promised redistribution for the second part of the five-year period remains valid. “The French must be the first beneficiaries of the results,” , he stressed, anxious to mitigate a still sharp tax ras-le-bol

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Less than a week after the announcement of a zero growth in the second quarter, the promise is surprising. She has also overtaken the services of Bercy, the latter referring to the Elysée for more details. And because Michel Sapin hammered for months that the priority is to keep the deficit targets and to continue funding the charges reductions for companies promised in the responsibility pact. If a reflection committed to Bercy on tax cuts for households, the Minister of Finance, already smarting from the failure on unemployment, had recently warned: “We’ll see in 2016 where we will be, but I do not want to announce the decisions we would not be able to make or take full responsibility. “ ” Whoever thought we were going to distribute money to households are for their fresh “, also confided a counselor after the stagnation of GDP in the spring.

Everything is still very fuzzy

The head of state has obviously decided otherwise. “Yesterday, the Elysee spared Bercy. Today this is no longer the case, “, decrypts a government member. So no question of waiting to see where are the public accounts and growth in mid-2016 to possibly lower taxes. Hollande wants the measure to be integrated from the 2016 Finance Bill to be presented at the end of September the Council of Ministers. “We will not wait until mid-2016 for action” , prevents the entourage of the head of state, holding acquired growth will be better in 2016 than in 2015.

What is the measure? And what will be its magnitude? All this is still very unclear. The announcement for the time being, eminently political. Everything will depend on growth assumptions used in preparing the 2016 budget, suggested Hollande. “The dynamics are good” , the emphasis at the Elysee. This year, “there will be over 1% growth” , the president said. For 2016, Bercy table at this stage, a growth of 1.5%. “We do not move from 1% [2015] because things are chaotic. The target of 1.5% next year growth is maintained “, also explained to Michel Sapin” World “dated Thursday.

Target “middle class”

The room for maneuver is narrow. Hardly more optimistic than the government, the consensus of economists expects growth of 1.2% this year and 1.6% in 2016 – figures that do not include the performance-cons spring. Besides the deficit reduction target is ambitious (-3.3% in 2016 after 3.8% this year) and Francois Hollande formally excludes touching the promised cuts costs to businesses.

After a move towards low-income households (income tax reduction on the 2014 income and elimination of the first tranche of IR this year), the head of state seeks to target “middle class” , according to the Elysee. In the summer the university’s approach to the PS Rochelle, he gives a pledge to his left. Leaves to make a bet “risky” – admits one of his supporters – the return of growth.