France targets loopholes for 2014 tax gain

France targets loopholes for 2014 tax gain
French Finance Minister Pierre Moscovici. File photo: Besoin de Gauche/Flickr
France aims to raise most of the €6 billion in additional tax revenue it needs next year by closing tax loopholes, Finance Minister Pierre Moscovici said on Monday.

Speaking on France Inter radio, Moscovici said that the tax burden on the economy would be increased in 2014 by 0.2 to 0.3 percentage points, or the equivalent of roughly €6 billion.

The business daily Les Echos had reported earlier Monday that the overall tax burden would climb to 46.5 percent of gross domestic product (GDP) in 2014 under a budget plan to be presented to the government on Wednesday.

Moscovici said the Socialist government of President François Hollande would keep its promise of not raising taxes on households except for the VAT sales tax, which is being hiked to lower taxes on businesses in a bid to boost job creation.

But the minister said there will be additional tax revenue "which will come essentially from unproductive loopholes from which we want to recover resources".

He noted however that most of the fiscal consolidation effort for 2014 was due to come from spending cuts, unlike 2013 when tax increases dominated.

Les Echos said the budget proposals would include €10 billion in savings from tax and spending measures.

France – the eurozone's second-largest economy, after Germany – was supposed to push its public deficit back down to EU's notional ceiling of 3.0 percent of GDP this year.

The government already said in February it would miss that target, forecasting a deficit of 3.7 percent.

The European Commission has in return insisted that France push the deficit considerably below 3.0 percent in 2014.

French central bank governor Christian Noyer said last week that France should freeze pensions, civil servant salaries and social benefits to save 40 billion euros 2014 to meet the 3.0 percent deficit target.

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