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
FootballGerman sparks three goals in four minutes at favourite No 10 role
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
New Articles
i100... she's just started school
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs General

Volunteer Trustee opportunities now available at The Society for Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Volunteer your expertise as Tr...

Early Years Educator

£68 - £73 per day + Competitive rates of pay based on experience: Randstad Edu...

Nursery Nurse

£69 - £73 per day + Competitive London rates of pay: Randstad Education Group:...

Primary KS1 NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam