Laurent Saint-Martin, the outgoing Minister of Budget, announced a special law aimed at preventing administrative paralysis and ensuring public services continue until a new budget is approved next year. This legislation, based on Article 45 of the LOLF, allows the government to maintain tax collection at previous rates and roll over the 2024 budget into 2025. While it cannot address all fiscal issues, it aims to avert disruptions as Parliament races to pass it by year-end. Pensions will not be affected by these limitations.
Laurent Saint-Martin Unveils Special Law to Prevent Administrative Standstill
This Monday morning, Laurent Saint-Martin, the outgoing Minister of Budget, shared on TF1 that the “special law” designed to prevent administrative paralysis is officially prepared. This extraordinary legislation aims to ensure the uninterrupted provision of public services until a new budget is established early next year.
Understanding the Special Law’s Framework
The foundation of the special law rests on Article 45 of the organic law governing finance laws (LOLF), which acts as the financial constitution for the State. This particular clause, which has remained unused since its inception in 2001, allows the government to seek authorization to continue tax collection at previous year’s rates if a budget is not approved before January 1. Saint-Martin emphasized that this law also permits the rollover of the 2024 budget credits into 2025, aiming to avert a potential “shutdown” that could paralyze public administration.
After its presentation to the Council of Ministers, the law must undergo debate and approval by both the National Assembly and the Senate before the year’s end. With a tight schedule, the submission is due by December 19 and adoption by December 31, under an expedited legislative process. However, it is important to note that this law cannot resolve all fiscal challenges. Saint-Martin clarified on TF1 that “the special law cannot index the income tax scale to inflation, as this is not constitutionally viable,” which poses a risk of rejection for such a proposal. The budget for 2025 initially intended to adjust the income tax scale according to a 2% inflation rate.
The potential for censorship threatens the revaluation of the income tax scale, which could lead to approximately 380,000 additional households being subject to taxes on paper, and 17.6 million households facing higher tax liabilities compared to 2024, as per the OFCE’s analysis. This situation may only be temporary until the subsequent government implements the 2025 budget, which could retroactively reimburse overtaxed individuals. However, this remains speculative at this juncture.
In contrast, pensions will not be impacted by these limitations. Saint-Martin indicated that their indexing is mandated by the Social Security Code and will automatically take effect at the start of the year. This change will significantly benefit retirees, who would otherwise have experienced a modest revaluation of only 0.8% if the 2025 budget had passed, instead of the expected 2.2%. The original plan also considered postponing a second increase for small pensions to July 2025, a scenario that has since been dismissed.
As a provisional measure, the special law does not eliminate the necessity for a fresh budget discussion at the beginning of 2025. According to Saint-Martin, this process could extend over “weeks or months,” yet it is crucial to maintain budgetary governance in line with constitutional standards. Presently, the foremost objective is to avert any disruption in budget continuity, a situation that both Laurent Saint-Martin and Emmanuel Macron have described as a “catastrophe.” The responsibility now lies with Parliament to swiftly and efficiently pass this emergency law to prevent any administrative gridlock as the new year approaches.