December 1, 2023
France sets inflation target with 2024 budget bill

PARIS (Reuters) – The French government will boost welfare and pension payments next year to help families fight inflation while also trying to get its public finances under control, Finance Minister Bruno Le Maire said on Wednesday, forecasting a 2024 Said while presenting the budget bill.

“Clearly the primary challenge is to respond to the worst inflation crisis since the 1970s, which is affecting developed countries without exception,” Le Maire told reporters.

“The second challenge is to reduce debt and reduce the deficit.”

But as France ends costly caps on gas and electricity prices, Le Maire warned that the state alone can no longer afford the costs of fighting inflation.

The government has in recent days pressured France’s biggest food retailers to sell car fuel at cost price and is stepping up annual food price negotiations between retailers and producers in a bid to get lower prices to consumers faster.

After spending heavily this year and last year to help households and businesses cope with energy price shocks, the government has nothing but curbs on support at the risk of derailing its deficit-reduction plans. there is no substitute.

The Haute Conseil des Finances Publiques, an independent fiscal watchdog, said the plan to reduce the public sector budget deficit from a projected 4.9% of GDP this year to 4.4% in 2024 lacks ambition and would put France behind other EU countries. There is a risk of falling behind.

The government aims to gradually reduce the fiscal deficit over the coming years until it falls below the EU’s 3% limit in 2027.

green investment

In terms of revenue, the government aims to green its tax policies by raising taxes on businesses and activities that pollute more and using the income to fund green investments.

To that end, the 2024 budget bill would gradually phase out the tax breaks farmers and public works companies receive on their vehicle fuel, while replacing existing taxes on the most carbon-emitting cars with existing incentive/disincentive programs. Will be strengthened under.

The government will also hit new taxes on toll road operators and airport operators, raising an estimated 600 million euros annually.

Le Maire said the 2024 budget would implement a minimum 15% global corporate tax agreed among about 140 countries in 2021 and is expected to generate tax revenues of 1.5 billion euros in 2025.

The budget did not include plans for a tax increase on plane tickets, which had been considered over the summer. Nor does it include a tax increase on short-term rentals that would hit Airbnb, although a finance ministry source said this could be added by MPs in Parliament.

Meanwhile, the government plans to increase investment in eco-friendly projects by 7 billion euros, taking total investment next year to 40 billion euros.

(Reporting by Leigh Thomas; Editing by Christina Fincher)


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