Pre-election Period requires the executive decidedly keen to be able to distribute a final tax gift to households. François Hollande, the first, had made the announcement on June 30, in Les Echos , indicating that a “further reduction of taxes on households could, if we had the margins maneuver “… it is to say” if Brexit despite the growth was 1.7% in 2017, “is better than the government’s forecast of 1.5%. repeated promise in the speech of July 14, still subject to this condition, “if we can have a growth of 1.7% in 2017″. And again on August 19 in an interview with regional daily “if growth is increasing in 2016, we will continue this movement because the French must be the primary beneficiaries of the results,” he guaranteed.
Taking the cords of the Exchange, Finance Minister Michel Sapin, already unenthusiastic this unexpected gesture face of European austerity demands, insisted on the need for growth: “at 1.5%, we can not lower taxes, he warned on July 4th. There will be no tax cut that if additional growth. “
in the end tax ras-le-bol
Still, Thursday, August 26, BFM TV, Manuel Valls has freed conditional. Concerned that the left is not “identified to tax”, he assured that the government would “continue the decline in income tax” (without giving further details, arbitration is not yet made ) to “restore purchasing power to the French” … and then he plans himself growth “of 1.5% for 2016 and 2017″. In fact, the publication in mid-July a zero figure for growth of 2 th quarter wiped hope to have a more dynamic recovery. On the contrary, the forecast Bercy looks almost optimistic today as the IMF, given the spring air hole, lowered its forecast for 2016 French at 1.25%.
But no question as to the executive to give up this gift electioneering. What better than a tax cut to achieve, in the eyes of the French, “it gets better” became the unofficial campaign slogan of the head of state? And this is the last chance to try to erase the Presidential balance the refrain of “fiscal ras-le-bol” which was printed in the opinion following the brutal tax increases of 2012 and 2013 … and who persists despite three drops already since in 2014, 2015 and 2016, targeted at the poorest households.
Bercy and Brussels not thrilled
Gone, then, the growth condition of 1 , 7%? The pill must be bitter for Bercy, faced with the delicate exercise of closure of the last budget of five years, and must already juggle promised relief to businesses and financing new spending that continue to be announced since the beginning of year (signing bonuses in SMEs, increase the salaries of civil servants, support plans for agriculture, smaller declines in allocations in local communities …).
But the pill is most likely to be hard to swallow for Brussels, which does not intend to accept excuses for deficit reduction. Michel Sapin has he not already had to justify, July 11, to the European Union of abandoning the plan to save 50 billion euros promised early 2014, recognizing that the objective would not held in 2017 (18 billion to save a priori that year)? The minister justified the extra expense of the fight against terrorism but assured that the objective of reducing the public deficit to 2.7% in 2017 would be required. But this new gift Valls shows that deficit reduction is not the priority of the French government. Moreover, it is understood and the European Commissioner for Economic Affairs Pierre Moscovici, who warned this morning on France 2: “France must reduce its deficit below 3% in 2017. It it is engaged. There will be no new deadline. France chooses its fiscal policy but what is fundamental is that the economic balance is respected. “
economic nonsense
Facing the European imperative and in a context of sluggish growth, the government will be forced to settle for a modest gesture, well below the 2 billion mentioned a time. This is why some advocate a more targeted measure, as the increase in the premium business, additional income paid to the working poor or declining CSG for modest pensioners. Except that, politically, these measures would not have as much visibility and impact that a tax cut on income. For, it was understood, the challenge is entirely political, and too bad if it makes no economic sense, knowing that if he must lower levies, reduce income tax -already one of the lowest in Europe-is not at all a priority.
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