Interview of French Minister Michel Sapin
5 October 2015

The 2016 Budget Bill

The 2016 Budget Bill puts public accounts back on the right track with control of expenditure and reduction of public deficit. However, it is above all a budget of tax reduction for average households and companies. It also takes care of financing the assigned priorities of schools, justice, security, culture and defence.

Content published under the Government Valls II from 2014 26th August to 2016 11th February
The 2016 Budget is a budget that keeps its promises. It puts public accounts back on the right track, implements the political choices made and is adaptable to emergencies and unforeseen events.
It is thus a budget ensuring “consistency and confirmation of the political choices made at the beginning of the current five-year presidential term of office”, as stated by the French President.

The 2016 Budget puts public finance back on the right track

  • Expenditure is reduced: €16bn of savings will be made in 2016, as against €14.5bn initially planned in the Stability Programme, reaching a total of €50bn for the 2015-2017 period.
  • The deficit is reduced. In 2016, public deficit will return to 2008 levels: it is set to fall from 3.8% of GDP in 2015 to 3.3% next year. The objective is to return to 2.7% in 2017, under the 3% mark. In 2016, structural deficit is set to return to a level not seen since 1980: it will thus come to 1.2% of GDP. In 2015, it is set to return to 2000 levels. The social security deficit will have been halved by 2016 as compared with 2011, reaching its lowest level in 10 years. The general national pension system will even show a surplus again.
Result: the proportion of public debt within GDP will stabilise, increasing from 96.3% to 96.5% between 2015 and 2016: this represents a marked change as against the continual increase observed over the last 20 years. 

The 2016 Budget implements political choices

Taxes are reduced for households: the proportion of households subject to taxation will return to pre-crisis levels. The reduction of income tax, begun in 2014 and continued in 2015, will be intensified in 2016.
  • Tax reductions for households represent an additional €2bn in 2016, involving 8 million households. Altogether, 2/3 of households liable for income tax (12 million households) will have benefited from the reductions decided upon since 2014.
  • Taxes are reduced for companies: the CICE (competitiveness and employment tax credit), the Responsibility and Solidarity Pact, additional amortisation and measures for very small enterprises and SMEs will represent tax cuts of €33bn in 2016 and around €41bn in 2017. The tax system has been reorganised, ensuring that taxation on labour is henceforth considerably lighter: down by €27.5bn since 2014, more than €23bn net since the beginning of the current five-year presidential term of office.
Security, defence, justice, culture and education are priorities with regard to financing, their resources and personnel are set to increase, with the creation of 12,500 jobs in 2016. Education, in particular, remains the foremost item in the State budget for the second consecutive year, and has the benefit of an additional €500m. The culture and communications budget will come to €7.3bn in 2016, that is to say an increase of 2.7% in relation to 2015, and tax subsidies for the film industry will be increased in order to ensure France’s attractiveness for the shooting of films.

The French social model has been preserved and even consolidated, bringing guarantees and protection for French people. Inequalities have been decreasing since 2013: increase in the RSA (Active Solidarity Income) income-related benefit and in benefits available to poor single-parent and large families, at the same time as reinforcement of the progressivity of the tax system and the creation of a new tax bracket for high incomes, etc.

The measures taken since 2012 consolidate social security protection for the French people: reimbursement of treatment against hepatitis C, 100% reimbursement of termination of pregnancy, setting up of the occupational hardship account (compte pénibilité), etc. This policy will continue in 2016 with, amongst other measures, the bringing into general use of social security cover to guarantee the payment of child-support obligations and reform of universal health protection. Since 2012, no additional excesses have been introduced nor have any reimbursements been brought to an end; this will also be the case in 2016.

The 2016 Budget is adaptable to emergencies and unforeseen events, with one core principle: no new expenditure without savings to finance it. Compliance with this principle does not prevent action, with initiatives in particular to support the agricultural sector, finance the reception of refugees and fight against terrorism. The number of military personnel is no longer falling, but is henceforth increasing (net increase of 2,300 in 2016). The undertakings made in 2012 with regard to the creation of posts in the judicial system and police will be more than fulfilled in 2016: +6,030 positions, whereas the undertaking was for +5,000 positions.

The Social Security Financing Bill for 2016

The social security deficit has decreased in 2015, and is set to fall to below 10 billion euros in 2016, its lowest level in 10 ye... [Read more]

2 October 2015