France To Reduce Tax Breaks

French Prime Minister François Fillon has announced a general paring down by 10% of all tax breaks in France, albeit with a few “exceptions” so as to not increase labour costs, and has also confirmed plans to abolish some tax shelters on a “case-by-case” basis. Fillon has reiterated that the overall aim of the government is to reduce existing tax breaks in France by around EUR5bn over the course of two years. This would help the government to reduce the public deficit to 6% of GDP in 2011, to 4.6% in 2012, and finally to 3% in 2013. There are currently an amazing 500 separate tax breaks available in France, costing the state an estimated EUR75bn a year. Defending the government’s plans, Fillon underlined the fact that given both the recent economic forecasts and decisions made, France has been able to avoid implementing highly unpopular austerity measures, including tax rises and cuts in civil servants' pay. The government must not delay in taking action and act with discipline, without sacrificing investments in the future, he noted. Fillon emphasized that ministers will no longer be able to use their discretion to create new tax breaks, underlining the need to end this “bad habit”. Defending national sovereignty means redressing the public finances, he added, stating that ministers should be proud to spend less. Regarding pension reform, Fillon confirmed that in order to gain “acceptability” for the reform, the legal age of retirement would need to be increased progressively, so as not to destabilize those employees nearing retirement.

Printable version