Bercy provides a new tax cut is not on the agenda for next year. But in a year of presidential elections, the Elysee ensures that “nothing is decided”. Why this extent it is being debated? Is it compatible with the deficit?
What is planned?
According to Les Echos, Francois Hollande is “determined” to make a new tax measure for households. A reminder that “doing better” country in view of presidential elections, by redistributing the fruits that grow off again, with 0.5% GDP growth in the first quarter.
Finance Minister Michel Sapin, three weeks ago, has nevertheless ruled out any new boost to taxpayers in 2017. “There are no plans for new measures for households,” he said, assuring that the government – had pledged to make five billion euros to households – had already given his word
the move, designed to end the “ras-le-bol. tax “tax hikes born early quiquennat, resulting in three successive tax cuts on income, which last two billion in 2016. with the key reflux of tax burden, which should rise from 44.8% of GDP in 2014 to 44% in 2017.
the government does go further which will be achieved despite the Finance Ministry? On the side of Bercy, maintained that “nothing is planned.” Contacted by AFP, the Elysee was less categorical: “nothing is decided,” we are assured, without further comment on the subject
What are the sticking points <.? / p>
The difficulty is funding this possible decrease in taxes. The government is indeed committed to Brussels to bring its deficit below the 3% of GDP in 2017, after 3.5% in 2015 and 3.3% in 2016. This implies a strict control of its public spending.
Gold Executive announced in January a series of new spending, such as the plan for employment, the exceptional support plan for breeding, the funds for the energy transition and the increase the salaries of civil servants, estimated at four billion euros in 2016 and which will have budgetary consequences in 2017.
“These are pre-election gifts”, denounced on RTL Gilles Carrez, president (Republicans ) of the Finance Committee to the national Assembly, which assesses for its part to 5.5 billion euros these measures. “If you add in a more tax reduction (…) we may have 2017 highly degraded finances,” he warns.
Government side, it ensures that these expenses will “fully funded” by compensatory measures. But if a new tax cut, the equation would be complicated. Especially since Bercy will have to integrate its 2017 budget last drop of 5 billion euros of contributions to business, under the responsibility pact.
Can these challenges be overcome?
In theory, a new tax measure is nevertheless still possible. But under certain conditions, if the government wishes to meet its commitments vis-à-vis Brussels and businesses.
The first is that the tax cut is offset by a series of additional savings , equivalent. One solution would be however complicated to implement, given the level of savings it already and already will enact to counter the various measures announced by the executive.
The other possibility, which seems to bet on the Elysee, depends on growth: in case of higher than expected activity in the State may benet effect of higher than expected revenues, including via the VAT revenue. This will give him some leeway for a new tax cut.
Still, the government’s target of 1.5% growth this year is far from being achieved, despite the 0.5% in the first quarter. “It gets better” but “not good enough”, has warned the French Coeuré Benedict, Executive Board Member of the European Central Bank (ECB), to which the recovery in activity is not based on sustainable factors.
According to Les Echos, this should push the Elysee to wait until the summer before making any decision. Time to know the growth of the second quarter and see if the implementation of the 2016 budget in line with expectations.
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