French Finance Minister Bruno Le Maire said billions of euros of promised tax cuts will be spread out gradually over several years as the government tries to reduce its budget deficit.
(Bloomberg) — French Finance Minister Bruno Le Maire said billions of euros of promised tax cuts will be spread out gradually over several years as the government tries to reduce its budget deficit.
President Emmanuel Macron has pledged to slash a further €2 billion ($2.2 billion) in taxes on households and had planned to complete the second half of an €8 billion reduction in a levy on industrial production, known as CVAE, in 2024.
Le Maire told France Info radio on Tuesday that the government has decided on a slower tax-lowering path that will be completed by the end of Macron’s second five-year term in 2027.
“We want to begin a new reduction in a gradual way to take into account the situation of public finances,” Le Maire said.
The watering down of tax-cut promises comes as the government tries to shift to an era of tighter budgets after massive spending during the Covid pandemic and energy crisis.
The country’s public finances are in the spotlight after Fitch Ratings downgraded its credit rating in April, and rising interest rates are set to make debt servicing one of the biggest sources of spending in 2027, reaching €70 billion a year. Sluggish economic growth is also increasing the challenge of reducing the budget deficit.
Earlier this month, the Finance Ministry outlined plans for more than €10 billion of annual cost savings in the coming years and a €4.2 billion reduction in the central state’s spending next year. The government also plans to pare back a measure capping electricity prices.
Le Maire gave more details of those savings on Tuesday, saying the government will take back half of the €2.5 billion of excess cash holdings at state operators, such as environmental agencies and universities.
“Everyone listening knows that heavy debt is unbearable and a danger for the French nation,” Le Maire said. “Everyone knows we have to start cutting debt when things are going better.”
(Updates with comments from finance minister starting in fifth paragraph.)
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