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French Deputies Restore 2012 Budget

by Ulrika Lomas,, Brussels

20 December 2011

The French National Assembly (lower house) has adopted during a second reading the country’s 2012 budget bill, essentially restoring the initial text proposed by the government, and containing a raft of targeted tax rises and cuts in public spending designed to enable the government to achieve its ambitious deficit reduction targets.

The text had been profoundly modified during a first reading by the French Senate, or upper house of parliament, with its now left-wing majority.

During their second reading, deputies in the National Assembly re-established several key measures provided for in the government’s two austerity packages, unveiled in quick succession by Prime Minister François Fillon at the end of August and at the beginning of November, including notably the 3% tax on top earners in France with income in excess of EUR500,000 (USD652,425) or EUR1m for a couple, and the tax on drinks containing added sugar and artificial sweeteners.

France’s lower house also voted to abolish certain initiatives introduced by senators, including the tax on financial transactions and the new top rate of income tax in France of 45%.

Commenting on the outcome in the lower house, member of the majority Union for a Popular Movement (UMP) party, Jérôme Chartier welcomed the deputies’ decision to restore the initial finance bill, bringing to an end the chaos caused by the Senate. According to Chartier, the budget will enable the government to meet its deficit reduction targets for 2012 within the framework of 1% growth.

The government aims to reduce public debt in France as a matter of priority from 5.7% this year, to 4.5% next year, to 3% in 2013, 2% in 2014 and to finally 1% in 2015.

The text is now due to be re-examined by the French Senate, before subsequently returning to the National Assembly for definitive adoption on December 21. In accordance with the constitution, the lower house has the final say.

TAGS: tax | budget | food | France | individual income tax

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