PARIS: French President Emmanuel Macron has ordered further cuts to income tax to be matched euro-for-euro by cuts in public spending to keep the budget deficit from spiralling, the finance minister said.
In his response to months of anti-government protests, President Emmanuel Macron said that he would cut income tax further by $5.6 billion.
“The president has set a principle of which I am the guarantor: each euro of decrease in income tax must be financed by a decrease of one euro in public spending,” Finance Minister Bruno Le Maire told LCI television.
The tax cut comes on top of a 10 billion euro package of concessions to protesters in December, which was aimed at boosting the income of the poorest workers and pensioners.
“The latest measures are fiscally expansionary and the risk is that funding them through spending cuts may prove difficult,” wrote Morgan Stanley economist Matthew Pennill.
“The overall plan represents a sizeable fiscal boost to the economy. That’s good from a growth perspective. But, despite a better budget outturn in 2018, we see risks of extra (debt) issuance going forward, with large-scale fiscal consolidation now looking less likely,” he added.
Le Maire said the tax cut would benefit 15 million households and target the middle classes in particular.
Budget Minister Gerald Darmanin said it would ease the burden on all but the wealthiest taxpayers by about 10 per cent from next year. — Reuters
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