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Income tax, property grants and gas prices: What’s in France’s 2023 budget?

It took a lot of political brinkmanship, but France's 2023 budget has finally passed through parliament - from gas price freezes to tax allowances and grants, here's a look at what is in it.

Income tax, property grants and gas prices: What's in France's 2023 budget?
French finance minister Bruno Le Maire announces the 2023 Budget plans. Photo by STEPHANE DE SAKUTIN / AFP

In total the government spent 55 hours debating it, and made 117 changes to the original budget proposed by finance minister Bruno Le Maire at the end of September.

In the end that was not enough to persuade the opposition parties to support it, and Prime Minister Elisabeth Borne used the constitutional tool known as Article 49.3 to push the bill through the deadlocked parliament. 

That led to three votes of no confidence in the government, all of which were defeated.

So as the dust settles from the political drama, here’s a look at what the budget means your your wallet;

Inflation – two of the biggest measures to protect households from the rising cost of living had already been announced – gas and electricity prices will remain capped in 2023, albeit at the higher rate of 15 percent, while low-income households will get a €100-200 grant. The energy price cap is expected to cost the government €45 billion in 2023.

EXPLAINED: What your French energy bills will look like in 2023

Property renovations – the MaPrimeRenov scheme, which gives grants to householders for works that make their homes more energy-efficient, will be extended again into 2023, with a budget of €2.5 billion to distribute.

Income tax – the income tax scale will be indexed to inflation in 2023, so that workers who get a pay increase to cope with the rising cost of living don’t find themselves paying more income tax. “Disposable income after tax will remain the same for all households even if their salary increases,” reads the 2023 Budget.

Pay rises –  pay will increase for teachers, judges and other civil servants as inflation is forecast to reach 4.3 percent next year after 5.4 percent in 2022. Around €140 million is assigned to increase the salaries of non-teaching staff in schools. 

Tax credits – parents in France can claim tax credits to offset the cost of childcare, and the ceiling for this has risen to €3,500 per year from €2,300.

New jobs – nearly 11,000 more public employees will be hired, in a stark reversal of President Emmanuel Macron’s 2017 campaign promise to slash 120,000 public-sector jobs – 2,000 of these jobs will be in teaching. 

Small business help – firms with fewer than 10 employees and a turnover of less than €2 million will also benefit from the 15 percent price cap on energy bills in 2023. The finance ministry will put in place a simplified process for small businesses to claim this aid. In total €3 billion is available to help small businesses that are suffering because of rising costs. 

There is also a rise in the ceiling rate for reduced tax contributions for small businesses – up from €38,120 to €42,000.

Refugees – In the context of the war in Ukraine, the government plans to finance 5,900 accommodation places for refugees and asylum seekers in various reception and emergency accommodation centres. The budget provides for a 6 percent increase in the “immigration, asylum and integration” budget.

Ministries – Le Maire also announced the budget allocation for the various ministries. The Labour ministry is the big winner with an increase of 42.8 percent compared to last year, coupled with the goal to reach full employment by 2027. Education gets an increase of €60.2 billion (or 6.5 percent more than in 2022), much of which will go on increasing teachers’ salaries, while the justice and environment ministries will also see increased budgets.

Conversely, there was a fall in spending for the finance ministry itself.

Borrowing –  the government will borrow a record €270 billion next year in order to finance the budget. “This is not a restrictive budget, nor an easy one – it’s a responsible and protective budget at a time of great uncertainties,” said Le Maire. 

The government is tabling on growth of one percent, a forecast Le Maire defended as “credible and pro-active” despite an estimate of just 0.5 percent GDP growth by the Bank of France, and 0.6 percent from economists at the OECD.

The public deficit is expected to reach five percent of GDP, as the EU has suspended the rules limiting deficit spending to three percent of GDP because of Russia’s war against Ukraine.

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POLITICS

Macron calls for stricter Twitter controls on Covid disinformation

French President Emmanuel Macron criticised Twitter's new boss Elon Musk on Thursday, saying the entrepreneur was wrong to drop the fight against Covid disinformation as he slashes back content moderation on the platform.

Macron calls for stricter Twitter controls on Covid disinformation

With his country facing a fresh surge in coronavirus infections, Macron said the subject of misleading Covid information should be addressed head on, not swept under the rug.

“I think this is a big issue,” Macron, on a state visit to the United States, told broadcaster ABC. “What I push very much, for one, is exactly the opposite: more regulation.”

He said such protections have been implemented and enforced in France and “at the European level.”

Freedom of expression remains paramount, Macron insisted, “but there is responsibilities and limits” to what can be written and disseminated.

“You cannot go into the streets and have a racist speech or anti-Semitic speech,” the French leader said. “You cannot put at risk the life of somebody else. Violence is never legitimate in democracy.”

Macron’s concept of freedom of expression within acceptable limits is far from the libertarian approach of Musk, a self-described “free speech absolutist” who has sacked many of the Twitter employees tasked with content moderation.

Musk has begun to allow Twitter users banned from the platform for posting disinformation, such as former US president Donald Trump, to return.

And it emerged this week that Twitter has stopped enforcing a rule preventing users from sharing misleading information about Covid-19 and vaccine effectiveness.

The billionaire Musk has made no secret of his fierce opposition to health restrictions put in place to fight the pandemic, especially when they meant the temporary shuttering of his Tesla electric vehicle factory in California.

“To say that they can not leave their house and they will be arrested if they do… this is fascist. This is not democratic, this is not freedom,” Musk raged in April 2020 on a conference call with analysts.

On Wednesday the European Union issued a sharp warning to Musk, saying he must do “significantly” more to fight disinformation, such as reinforcement of content moderation, in order to comply with EU law.

“There is still huge work ahead” for Twitter, said Thierry Breton, the EU commissioner for the internal market.

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