The finance bill (PLF) and the social security financing bill (PLFSS) for 2023 were on the menu of the Council of Ministers on Monday, September 26. The first corresponds to the State budget, the second is making a lot of noise at the moment because it could contain an amendment on pensions. We explain the differences between the two.
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What is the finance bill (PLF)?
The finance bill (PLF) is the bill that results in the State budget. Like a business, it has resources, that is to say money that comes into the coffers, and expenses. What goes into the coffers are the taxes that citizens and businesses pay. And what comes out of it are public spending on education, police, justice, health, etc.
If the expenditures are greater than the resources, the budget is in deficit. This has been the case for the French State budget for more than forty years. And the accumulation of these deficits over the years is the state’s debt.
The development of the PLF is a veritable political marathon that lasts a whole year. Top start in January, the Prime Minister sets the priorities then the Ministry of Finance produces an initial analysis. For this, he looks at the expenses for the current year and the forecast expenses for the following year. These forecasts come from the various ministries which explain what they think they need, but also the outlook for unemployment or growth.
Budget conferences between Bercy and the ministries thus make it possible to negotiate the amounts of credits allocated to each. At this stage, the government refers to the High Council of Public Finances (HCFP) which decides on the macroeconomic forecasts.
The arbitrations are made in June and the ministers then receive a framework letter, which sets a ceiling for credits and jobs. It is on these bases that the policy debate on public finances (DOFP) takes place in Parliament, which examines expenditure and employment ceilings and performance indicators. In July, the distribution conferences are held: Bercy and the ministries definitively distribute the credits. The text of the PLF is then finalized, transmitted to the HCFP then to the Council of State and finally, presented to the Council of Ministers, like this Monday morning.
The final sprint starts on the first Tuesday of October with the submission of the PLF to the National Assembly. The Parliament (Assembly and Senate) then has 70 days to debate the text and come to a final version and its adoption. The finance law is then promulgated no later than 31 December and published in Official newspaper.
But since the PLF is partly based on forecasts, the budget law can be adapted during the year, for example if there are more expenses than expected, the budget must then be adjusted. In this case, an amending finance law is adopted.
What is the social security financing bill (PLFSS)?
The Social Security Financing Bill (PLFSS) has been in existence since 1996. It is a text that sets social security spending targets based on revenue forecasts.
The PLF and the PLFSS are presented and voted on at the same time but are not of the same nature: these two texts lead for the first to the finance law (LF)which sets the state budget for the coming year, and for the second the Social Security Financing Act (LFSS), which aims to control social and health expenditure, but has no binding budgetary scope. Mon lays down the State budget (expenditure and revenue), the other establishes Social Security revenue forecasts and expenditure targets. Article 34 of the Constitution provides that the social security financing laws “determine the general conditions of its financial equilibrium and, taking into account their revenue forecasts, set its expenditure objectives”.
The PLFSS has four main parts: the first approves the last closed financial year (year N-2, i.e. 2021 for the 2023 PLFSS); the second relates to the current financial year (year N-1, i.e. 2022 for the PLFSS 2023); the third looks at revenue forecasts; the fourth sets expenditure targets by branch (illness, family, pensions, accidents at work, occupational illnesses and autonomy), in particular the national target for health insurance expenditure (Ondam).
The preparation of the PLFSS falls within the competence of the government. The Social Security Department (DSS) draws up the text, in collaboration with the Budget Department and with the departments of the Ministry of Solidarity and Health, and in conjunction with the Social Security Accounts Commission ( CCSS). Everyone works on the text from mid-April to mid-October and the PLFSS is tabled by the government no later than October 15. Then it is up to Parliament to debate it. He has 50 days to decide.
Once enacted, the social security financing law (LFSS), like the finance law (LF), may be adapted during the year with an amending law.
If we talk so much about the PLFSS this fall, it is because Social Security, in its “old age” branch, also contains the pension budget. The government could therefore decide to add an amendment to this text which would make it possible to extend the contribution period.