PARIS (Reuters) – The French government presented on Wednesday a budget for 2024 marked by the desire to control public finances while protecting the purchasing power of households in the face of persistent inflation.

“The first challenge is obviously to respond to the most serious inflationary crisis since the 1970s and which is hitting all developed countries without exception,” indicated the Minister of Economy and Finance, Bruno Le Maire, to journalists.

“The second challenge is to get the country out of debt and reduce the deficit.”

The new budget will mobilize a total of nearly 25 billion euros to index social benefits, pensions and the income tax scale to inflation.

To curb public debt, which exploded during the COVID-19 pandemic, the executive plans more than 16 billion euros in savings in its 2024 budget, of which 10 billion are linked to the end of the tariff shield on the gas and electricity.

A necessary effort to respect the budgetary trajectory set by the government for 2027, when it hopes to have reduced the public deficit to 2.7% of gross domestic product (GDP).

For 2023, the deficit is expected at 4.9% and it should fall to 4.4% next year under the dual effect of savings and the expected increase in state revenue.

An effort was notably requested from companies with the postponement of the elimination of the contribution on business added value (CVAE) to 2027, a measure initially promised for next year.

GREENING THE ECONOMY

Several tax measures, intended to “green” the economy, also appear in the 2024 budget.

Thus, the tax advantage on non-road diesel (NGR) used by farmers and public works companies will be gradually reduced.

The government also announced the creation of a tax on large motorway concessions and the main airports, the annual yield of which should reach 600 million euros.

Once considered, the project of a direct tax on plane tickets was abandoned.

In total, the government plans 40 billion euros in environmentally friendly spending in 2024.

The draft budget does not include a removal of the tax loophole for furnished tourist apartments, which was once mentioned and which would have affected AirBnB in particular. A source within the Ministry of Finance nevertheless indicated that it could be added to the text by parliamentarians.

The finance bill (PLF), which includes the budget for 2024, and the Social Security financing bill (PLFSS) will be examined from October in the National Assembly and then in the Senate.

The executive, which does not have an absolute majority in the Bourbon palace, could have to resort to article 49.3 of the Constitution to have the texts adopted.

A first test for the government will take place this Wednesday during an extraordinary session at the National Assembly: the public finance programming bill (LPFP) for the period 2023-2027, which had been withdrawn in the fall last, will be examined again from 9:30 p.m. by the deputies.

(Reporting by Leigh Thomas and Blandine Hénault, editing by Kate Entringer)

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