Francois Fillon, the Prime Minister of France, has stated that the 2012 budget is going to be the most difficult on taxpayers since the Second World War. The major focus of the budget would be to bring down fiscal deficit by 20%.
Highlights of France Budget 2012:
Budget deficit to be reduced by one-fifth by 2012. In 2011, it is expected to be 113 billion euros.
50 percent of savings would be accrued by reducing expenditure. The remaining part will be achieved by increasing government revenue. Tax shelters will be abolished as part of the revenue generation process.
Value added tax (VAT) would be imposed on sectors such as restaurants.
Workers would see a deduction of one annual holiday.
The basic aim is to generate revenues amounting to 8 billion euros and maintain the exceptional credit rating enjoyed by France till the presidential elections of 2012.
Public debt to be reduced to 4.5 percent in 2012 from 5.7 percent of Gross Domestic Product (GDP) in 2011.
Public debt is further expected to go down to 3 percent in 2013 and to 2 percent by 2014.
The government is also looking at reducing public debt to 1 percent of GDP by 2015.
Debt payments will take up maximum part of the budget.
45.5 billion euros will be spent in the educational sector.
Tax burden is set to amount 44.5 percent of GDP in 2012 and become 45.4 percent in 2015 a record mark.
In 2012, 30.63 billion euros will be allotted for defense and this will exclude pensions.
This will be 1.6 percent more than the amount that had been allocated in the 2011 budget.
Major companies that are bound by carbon dioxide quotas will now be paying a one time tax that is expected to generate approximately 200 million euros.
Restrictions on public expenditure, which were in operation in 2011, would be effective in 2012 as well.
This spending freeze is expected to reduce budget deficit to 3% of the GDP in 2013, 2% in 2014 and 1% in 2015.
The budget focuses on reducing accumulated debt to 87.4% of GDP in 2012 and to 87.3% in 2013.
The budget aims to generate $13.6 billion in revenues in 2012.
Corporate taxes will be increased a new surtax will be levied on tax payers earning in excess of 500,000 euros on an annual basis.
Taxes will be levied on soft drinks, cigarettes and liquor.
The civil servant recruitment policy effective in 2011 would be persisted with in 2012 as well one professional would replace two retired officials.
The budget aims to save 12 billion euros in 2012 so that deficit can be minimized and a positive economic growth rate can be achieved.
Public debt services are supposed to cost 48.8 billion euros in 2012. In July, this figure was estimated at 50 billion euros.
Public spending would be reduced by approximately 6-8 billion euros in 2012.
The French government is looking to trim down budget deficit to 81.8 billion euros in 2012 compared to 95.5 billion euros in 2011.
Expectations from France Budget 2012:
The French government expects that through its 2012 budget it will be able to retain its position among the top 10 countries across the world, in terms of financial credibility. Fillon has revealed that the Euro has to be conserved and the present financial crisis across Europe has revealed serious issues with economic governance. He has further stated that the only way to bring down debt is to reduce governmental expenses.
Economic experts feel that the France 2012 budget is looking to achieve a certain degree of commitment and authenticity towards the well-being of the national economy. Through this budget, France will also try to address the requests for financial assistance from members of the European bloc.
The French Observatory of Economic Trend has forecasted that in 2012 the national economy would grow at 0.8 percent. The association is also expecting that several issues might come up in case the government goes ahead with its plan to fulfill the budget related commitments.