2007 Budget: lower debt and greater buying power are the priorities
Thierry Breton and Jean-François Copé introduced the Finance Bill for 2007 at the 27 September Council of Ministers meeting. The 2007 Finance Bill was drafted in accordance with four priorities: managing public finances responsibly and continuing to lower debt; improving employment and increasing buying power; modernising the State; and effectively serving the French people.
Managing public finance and continuing to lower debt
The 2007 Finance Bill was “designed on a cautious growth assumption”, specified Thierry Breton in his presentation (between 2% and 2.5%). The 2007 version of the Finance Bill assumes € 41.6 billion in debt, or € 5.3 billion less than in 2006. In addition, for the first time, the State’s expenditure decreased in volume terms. As a result, the remaining balance for all public administrations combined returned to a level that stabilises public debt in 2007 at 2.5% of GDP.
Employment and buying power
As concerns buying power, the Government chose to make 2007 the year to implement the income tax reform already ratified as part of the 2006 Finance Act. Income tax will decrease by € 3.9 billion. Concurrently, € 1 billion will be set aside to reassess the employment bonus grant scale: the grant will increase from € 467 in 2006 to € 714 in 2007.
On the employment side, the 2007 Finance Bill gives its main emphasis to new government-funded contracts and the “services to individuals” plan, not to mention lower employer taxes, particularly for small enterprises. The Government’s aim: to foster the emergence of growth companies.
Modernising the State...
While the Research Programme Act enjoys, for the third year in a row, € 1 billion in additional resources, the Government decided to make the Finance Act a decisive stage in the State’s modernisation. Through redeployment, improvements in productivity and modernisation audits, the Government will ensure its priorities are appropriately funded, all the while lowering the overall budget dedicated to these areas.
...to better serve the French people
The State’s sovereign powers - justice, security and action abroad - have been consolidated. To illustrate, the Guidance and Planning Budget for Justice has been increased by 5%. Lastly, to serve “France’s renown abroad”, public development aid has been raised to 0.5% of gross national income.