The government intends to reduce the public deficit, while continuing to protect households from inflation and investing in the ecological transition.
“This budget is the first step in restoring the trajectory of our public finances”commented Bruno Le Maire. The government presented its finance bill for 2024 to the Council of Ministers and to the press on Wednesday September 27.
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With this text,The executive intends to reduce the public deficit from 4.9% of GDP (gross domestic product) this year to 4.4% next year. On the growth side, he expects an increase of 1.4% in GDP in 2024 – a forecast considered “optimistic” by the High Council of Public Finances. To achieve its objectives, the government intends to release “16 billion euros in savings”, while continuing to support the purchasing power of households eroded by inflation. Here’s what you should remember about this project.
Indexes to inflation of social minimums and retirement pensions
The fight against inflation is one of the major “challenges” of the government, insisted Bruno Le Maire. To cushion the rise in prices on the purchasing power of households, 25 billion euros will be dedicated to inflation indexations. In detail, the revision of the income tax scale, increased by 4.8%, is estimated at 6 billion euros. The cost of the 5.2% increase in retirement pensions from January 1 amounts to 14 billion euros. THEsocial minimums will be revalued on April 1st “of the order of 4.6%”, according to Bruno Le Maire.
The new “fuel allowance” of 100 euros announced by Emmanuel Macron will cost 430 million euros. This measure “will affect 4.3 million people” among the most modest households, said the Minister of the Economy. “I don’t want there to be a single employee who gives up going to their workplace because the cost of refueling would be too high”explained Bruno Le Maire.
Promised tax cuts postponed
The 2 billion euro tax cut for the middle classes, promised by Emmanuel Macron in May, will have to wait. These reductions must appear in the 2025 budget, confirmed Bruno Le Maire.
Furthermore, the contribution on the added value of companies (CVAE), a production tax which was initially due to disappear completely next year, will finally be phased out gradually until 2027. In 2024, however, a first reduction of one billion euros will be recorded.
Investments for the ecological transition
This finance bill “affirms a major political choice in favor of decarbonization”, further assures the executive. The text provides for 10 billion euros of additional investments in favor of the ecological transition, including seven billion more from 2024. In detail, itThis envelope will partly finance the 1.6 billion euro increase in resources allocated to MaPrimeRénov’, aid for the energy renovation of housing. At the same time, 500 million euros will be earmarked for the “green fund” in order to renovate 2,000 schools from next year.
The State will also inject an additional 200 million euros to “support the greening of the vehicle fleet”. This budget will notably finance the leasing system at 100 euros per month for an electric car. This device will be aimed at “50% of the lowest-income households”said the Minister of the Economy.
Taxes on highways and airports
To finance these investments in favor of the ecological transition, the government wants the finance bill to mark a “shift from brown taxation to green taxation”. In this sense, the government wishes to tackle the “brown tax niches”, that is to say favorable to fossil fuels. The text also provides for the gradual increase in taxation on the purchase of non-road diesel (NGR) in the construction and agricultural sectors.
A new tax targeting motorway and airport concessionaires should generate 600 million euros. On the other hand, the tax on plane tickets, mentioned by the Minister of Transport in recent weeks, does not appear in the draft budget, adds Bercy.
More than 8,000 additional public employee positions
In 2024, the number of state agents and its operators will increase by 8,273 people, including 2,681 for the Ministry of the Interior, and 1,961 for that of Justice. The Ecological Transition workforce will increase by 732 jobs in 2024. At the Ministry of the Armed Forces, 580 positions will be created.
Furthermore, the government prides itself on a budget of “reset of public services”. Credits for the Ministry of Defense will increase by 3.3 billion euros, those for the Interior by 1 billion euros and those for Justice by 500 million euros. The school education budget will finally increase by 3.9 billion euros, making it possible in particular to implement the general revaluation of teachers’ salaries.
Savings mainly linked to the disappearance of the energy tariff shield
Most of the 16 billion savings appearing in the budget are linked to the gradual disappearance, by the end of 2024, of the energy tariff shield (10 billion). To this will be added in particular reductions in aid to businesses (around 4.4 billion) and employment policies (1 billion). The effects of the unemployment insurance reform should, for their part, produce 700 millions in savings. Part of these savings will be reinvested to finance other measures.