The French government has unveiled its 2014 budget which breaks an earlier promise to halt rising taxes for the French, weighed down by one of the highest tax burdens in the world.
Highlighting the gap between rhetoric and reality, the budget was officially described as “setting a course towards growth and jobs”. It laid down spending cuts of €15bn aimed at curbing the deficit, essentially from savings in the benefits and pensions sectors. But it also includes €3m in tax rises.
French households will be affected by a planned rise in VAT to a top rate of 20 per cent from. Experts are sceptical that credits put in place to boost hiring and spare lower-income earners from more tax pain would be sufficient to generate growth. French productivity is stagnating and predicted to reach only 0.8 per cent in 2014 according to the Organisation for Economic Co-operation and Development.
President François Hollande has acknowledged that the French are fed up with high taxes and last month promised a “fiscal pause” in 2014. Acknowledging the U-turn, Prime Minister Jean-Marc Ayrault accepted “full responsibility for having to raise taxes”. The budget revealed the country’s debt will rise to an unprecedented 95.1 per cent of GDP in 2014.
“The problem is that it’s a government which doesn’t like cutting the privileges of civil servants,” said the president of the Associated Taxpayers organisation, Alain Mathieu.