France Discloses Second Austerity Package

Thursday, 10 November 2011 11:27

Intent to secure its fiscal path and to reach its deficit reduction objectives, in the context of a slowdown in global growth, the French government has uncovered details of a second wave of austerity measures, which concern tax and expenditure issues. According to the plan, the government currently aims by 2016 to reduce by EUR2.6bn present tax breaks in France (les niches fiscales), mainly by abolishing in 2013 the Scellier initiative, granting tax relief for investment in rental property and by reducing the tax credit for sustainable development (CIDD), among other measures. Ot her key fiscal measures exposed by the Prime Minister concern plans to increase by 5% in 2012 and 2013 the corporate tax imposed on big companies in France with an excessive turnover of EUR250m, expected to yield around EUR1.1bn for the government. The government intends to increase the 5.5% reduced rate of VAT to 7% for specific services, generating additional income for the state of EUR1.8bn. Before the countrys public deficit gets back to below 3%, the government is going to freeze the income tax scale in 2012 and 2013 at the level for current year. The tax scale for the countrys solidarity levy imposed on wealth (ISF), and the rates and reductions pertaining to inheritance and gift taxes, will also be frozen. The measures are evaluated to yield around EUR3.4bn, of which EUR1.7bn will be gained in 2012.

Intent to secure its fiscal path and to reach its deficit reduction objectives, in the context of a slowdown in global growth, the French government has uncovered details of a second wave of austerity measures, which concern tax and expenditure issues.

According to the plan, the government currently aims by 2016 to reduce by EUR2.6bn present tax breaks in France (les niches fiscales), mainly by abolishing in 2013 the Scellier initiative, granting tax relief for investment in rental property and by reducing the tax credit for sustainable development (CIDD), among other measures.

Other key fiscal measures exposed by the Prime Minister concern plans to increase by 5% in

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France Discloses Second Austerity Package

Thursday, 10 November 2011 11:27

2012 and 2013 the corporate tax imposed on big companies in France with an excessive turnover of EUR250m, expected to yield around EUR1.1bn for the government.

The government intends to increase the 5.5% reduced rate of VAT to 7% for specific services, generating additional income for the state of EUR1.8bn.

Before the countrys public deficit gets back to below 3%, the government is going to freeze the income tax scale in 2012 and 2013 at the level for current year. The tax scale for the countrys solidarity levy imposed on wealth (ISF), and the rates and reductions pertaining to inheritance and gift taxes, will also be frozen. The measures are evaluated to yield around EUR3.4bn, of which EUR1.7bn will be gained in 2012.

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