France to save 100 bln euros

PARIS - Agence France-Presse

Prime Minister Francois Fillon announced plans yesterday to save 100 billion euros to eliminate France’s budget deficit by 2016, including 500 million euros in extra state budget savings next year.

“The time has come to adjust France’s efforts. With the president, we have only one goal: to protect the French people from the serious difficulties that many European countries are now facing,” Fillon said during a press conference.

“I believe that our citizens are now aware of the risks to our livelihoods and futures caused by deficits and debt. Bankruptcy is no longer an abstract term. Our financial, economic and social sovereignty require prolonged collective efforts and even some sacrifices,” he said.

Fillon announced a series of budget cuts and tax hikes aimed at keeping France’s finances on track and preserving its critically important triple-A credit rating.

“To reach zero deficit by 2016, which is our objective, we must save a little more than 100 billion euros,” he said. “It is unthinkable to do this exclusively by raising taxes, as the opposition suggests. This would lead to the tripling of income taxes and the doubling of VAT.” The government’s flagship reform of raising the retirement age from 60 to 62 will be brought forward from 2018 to 2017, he said.

The Value Added Tax (VAT) on many goods and services will be raised from 5.5 percent to 7.0 percent, except on essential goods such as food.

Corporate taxes will also be temporarily raised by 5.0 percent on corporations with annual turnovers of more than 250 million euros, he said