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French Senate Adopts 2011 Budget Bill

by Ulrika Lomas,, Brussels

08 December 2010

The French Senate has finally adopted the complete text of the country’s 2011 finance bill, providing for a historic reduction in public spending of EUR60bn, and for a reduction of existing tax breaks in France of almost EUR10bn. The bill was narrowly adopted by 177 votes to 153.

Provoking anger and criticism from opposition and centrist parties, the government insisted on a second deliberation of one measure of particular importance, and, as a result, the 15% reduction in social contributions benefiting home workers was finally abolished. According to French Budget Minister François Baroin, the measure represented one of the most important savings for the government, amounting to around EUR460m.

Senators also voted to reject other amendments approved by the French National Assembly, including plans to introduce a tax on plastic bags, and to impose a so-called “Tapie” tax on compensation in excess of EUR1m for moral prejudices.

French senators also voted to reduce the tax break benefiting companies linked to the abolition of local business tax in France and to exempt individual entrepreneurs with the legal status “auto-entrepreneur” from the controversial land tax imposed on all companies in France. The tax break accorded for the purchase of a tourist residence was also abolished.

France’s 2011 finance bill is due to be examined by a joint commission (une commission mixte paritaire – CMP) on December 13, when it is hoped that differences between the two assemblies will be resolved. A final text will then be submitted to both the French Assembly and to the Senate on December 15 for its definitive adoption.

The budget aims to reduce the public deficit to 6% of gross domestic product (GDP) next year, from a record level of 7.7% this year, and is based on expected economic growth of 2% in 2011, compared to 1.5% this year. The government intends to achieve its 3% deficit target by the end of 2013.

TAGS: tax | business | entrepreneurs | budget | France | tax breaks

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