cuts in public spending and more taxes on the rich

The French Government presented this Thursday a draft budget for 2025 with 60 billion euros between spending cuts and tax increases to control the growing public deficit and leave it at 5% of GDP.

“It is an urgent, unprecedented and necessary effort,” summarized the Budget Minister, Laurent Saint-Martinin the presentation of the bill that the Council of Ministers approved today and that must now be debated in the National Assembly.

With the Government in a parliamentary minority, the Minister of Economy, Antoine Armandasked the opposition to “have a higher vision” in the parliamentary debate in the face of the growing deterioration of public accounts, which will close 2024 with a projected deficit of 6.1% of GDP, from 5.6% last year.

The 60 billion euro effort includes a public sector spending cutsespecially from the central government, worth 40,000 million.

Tax increase

Another 20 billion will come from the “necessary and temporary” increase in taxes on the richest (those who enter more than 500,000 euros per year) and to companies with more than 1,000 million euros in turnover.

The greater contribution to the richest will affect 65,000 taxpayers for three years, and seeks to guarantee that they have a minimum tax of 20%. The Ministry of Economy hopes to collect 2,000 million annually with this measure.

As for large companies, some will be affected 440according to Economy figures, and they will pay an additional supplement on their benefits. It is expected to collect 8 billion additional euros next year.

There will also be a share buyback tax by companies, as well as an exceptional rate for maritime freight.

The Ministry of Economy also announced an increase in the tax on the purchase of airline tickets, which will also include travel on private planes, although it has not had time to include it in the budget bill.

It is also proposed to increase the electricity taxwhich according to the Government will not be perceived by consumers due to the reduction in the price of electricity, so that the total cost will drop for 80% of French people.

Another measure is the increase in the tax penalty for the most polluting vehicles, including non-rechargeable hybrid cars with worse environmental performance.

The reduction in spending will come through a series of measures, such as the six-month delay (from January 1 to July 1) of the revaluation of retirement pensions or the cut of 5,000 million euros to the Government’s contributions. to local corporations.

The Department of Economy promised a brake on the Administration’s expenses, as well as the reduction of 2,200 employees next yearas well as another 4,000 teachers in public education, due to the lower number of students.

A reform of aid to companies is also planned in order to encourage them to increase the lowest salaries, as well as a reduction in aid to companies for young people’s apprenticeships. Currently, there is an aid of 6,000 euros for hiring an apprentice.

Furthermore, Armand promised a thorough reform of the functioning of the State to optimize its operation and the use of resources.

The Minister of Economy insisted that deficit reduction and debt control are also an issue “of sovereignty” and “credibility”.

France will pay 50 billion euros this year alone in interest on its public debt.

The announcement of the budget project comes one day before the Fitch rating agency will release its French debt rating tomorrow, while Moody’s will do so on November 25th and S&P on November 29th.