Paris gives 1996 budget premature airing

Under fire from left and right over its economic thinking (or lack of it), the French government has hurried to release details of next year's draft budget.

The government seems to want to reassure financial markets and party critics that it is carrying on with radical economic reform, despite the departure of Economics Minister Alain Madelin last month. With high unemployment and a surging budget deficit, it has a tough job ahead of it.

Details of tax changes were issued by the Prime Minister's office more than a week before the draft budget was due to be presented to the Cabinet and a month before the budget bill is expected to go before parliament.

The package has two main goals. One is to encourage people to make better use of money that is "doing nothing" - tied up in savings accounts of different kinds. The tax changes on savings (which will mostly not come into force until 1997) would reduce tax relief on life- insurance contributions, and cut the thresholds applied to the taxation of income from stocks and bonds, effectively increasing the amount of tax payable. It is also planned to curtail some of the tax exemptions that apply to investment income and increase state revenue from the wealth tax. The government also plans more favourable treatment for small businesses.

These measures are aimed at shifting cash away from savings, towards spending, and reinjecting some life into the economy. But they have to be set against a 2 per cent increase in the standard rate of VAT last month - which was attacked for discouraging spending.

Another goal is fiscal austerity. The government aims to reduce the domestic budget deficit from this year's projected 322bn francs (pounds 41.2bn) to 290bn francs next year, with a view to meeting the EU's requirements for joining a single European currency before 1999.

Among specific measures proposed for 1996 is a 20-centime increase in the price of petrol and diesel fuel (equivalent to a rise of 3 per cent for petrol and 5 per cent for diesel); and a 3 per cent rise in the price of cigarettes and tobacco - on top of the 6 per cent rise when VAT was raised.

There must be a question whether the details offered so far give anything like the whole picture. The tax-raising measures will not generate enough cash to close the gap. The government is still looking set to miss its targets for revenue for this year, and there may be more - and tougher - measures to come.

The government is also committed to keeping public spending down and has reiterated its intention, revealed last week, to impose a pay freeze on the public sector. One aim of the budget leaks may be to convince the unions that other people besides themselves will be hit.

All seven unions representing public sector employees have called a strike for the middle of next month in protest against the government's plan to freeze public-sector pay in 1996. Their leaders are to meet the minister responsible for the public sector in an attempt to find a solution. However, the Prime Minister, Alain Juppe, seems determined to stick to his guns.

Public sector pay accounts for almost 40 per cent of all public spending, but the government has to weigh the possibility that serious labour unrest could affect the value of the franc and upset budgetary calculations that way. "I am convinced that the public employees remain open to a rational analysis of the situation," Civil Service Minister Jean Puech said yesterday. "It is job-creation that is the essential goal."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
News
news
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
news
News
i100
Sport
Alexis Sanchez missed a penalty before scoring the opening goal with a header at the back post
footballLive! Sanchez makes up for penalty miss to put Arsenal ahead
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
News
i100
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
Sport
Rooney celebrates with striker-partner Radamel Falcao after the pair combine to put United ahead
footballManchester United vs Newcastle match report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Ashdown Group: Marketing Manager/Marketing Controller (Financial Services)

£70000 - £75000 per annum + benefits: Ashdown Group: Marketing Manager/Marketi...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all