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

The Local France
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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

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.

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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.

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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. 

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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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