France has unveiled a budget for 2005 which should bring its deficit back under European Union (EU) limits for the first time in four years.
The budget is finance minister, and future presidential hopeful, Nicolas Sarkozy's first - and his last before becoming head of the ruling UMP party.
Its main feature is a set of high-profile tax breaks for both businesses and households.
They are to be paid for by boosted tax revenues and some cuts in spending.
For the public, some experts believe there may be little tangible benefit.
Other levies have been rising, such as pensioners' welfare payments, while opposition politicians said the tax deductions would disproportionately benefit the well-off.
And the government's 2002 promise to cut income tax by 30% before 2007 has stalled, since - in order to bring the deficit under control - Mr Sarkozy has permission from President Jacques Chirac to suspend three years of tax cuts.
Ambitions
Mr Sarkozy will publicly introduce the budget at a 1200 GMT news conference, although the outline of its provisions was released on Wednesday morning after a cabinet meeting.
The headline-grabbing tax breaks and the news on the deficit may help him to attain his ambitions.
His new post as party leader is often a stepping-stone to the presidency, and the budget fulfils his promise to get the deficit under control.
Since 2001, France has flouted the EU's rule that budget shortfalls must stay below 3% of GDP, in the name of stimulating the economy and evading recession.
The current year is likely to show a deficit of 3.6%, but the budget foresees 2005 producing a deficit of 2.9% as the economy expands by 2.5%.
"The budget seems realistic ... we share the expectation of growth," said Nicolas Claquin, economist at CCF in Paris - although he noted with concern that the budget lacked a view of the future beyond 2005.
Other predictions in the budget include inflation of 1.8%, and a rise in consumer spending of 2.4%.
I've always found the enemity between France and the US to be very ironic considering how the two countries are pretty much mirror images of each other.
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Anyway, it looks to me like they're doing what we're doing, only to a greater degree - cutting taxes while not putting a dent in spending. Slashing the income tax by 30 percent is unheard of in America, BTW.
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I'm studying for the CPA exam. Have a nice summer, and if you're down just sit back and realize that Joe is off somewhere, doing much worse than you are.
Anyway, it looks to me like they're doing what we're doing, only to a greater degree - cutting taxes while not putting a dent in spending. Slashing the income tax by 30 percent is unheard of in America, BTW.
Thought you might like the article Joe
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Master of Ossus wrote:Wow. A country has applied the Laffer Curve, for once.
Don't give me the Laffer Curve. It's BS. I mean, the curve is accurate, sure. But the thing is, you neve have any idea where you are on the curve. It's impossible to measure! You can do ANYTHING you want to the tax rate, then just bring out the Laffer curve and say "This will work because we are HERE and the tax raise/cut will put us HERE." I can just as easily say that the Bush tax cuts brought us to the left of the center as a Republican can say that the Bush tax cuts bring us into the center from off on the right.
And even so, this isn't an application of the Laffer curve. They are purposefully cutting government income in order to reinvest in the national economy, causing economic growth. Then they raise the taxes again later (or not...) when there is more around to tax. Completely different situations.
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Master of Ossus wrote:Wow. A country has applied the Laffer Curve, for once.
How do you apply a curve with no numbers?
Well, it takes a bit of wriggeling, and you basically have to find out where the curves peak is by trial and error.
Except that by the time you're done with the trial and error, the curve's peak will have changed, unless you seriously believe that one, universal, optimum tax rate exists for every economy under every circumstance. The Laffer Curve doesn't tell anyone shit.
Damien Sorresso
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Master of Ossus wrote:Wow. A country has applied the Laffer Curve, for once.
Don't give me the Laffer Curve. It's BS. I mean, the curve is accurate, sure. But the thing is, you neve have any idea where you are on the curve. It's impossible to measure! You can do ANYTHING you want to the tax rate, then just bring out the Laffer curve and say "This will work because we are HERE and the tax raise/cut will put us HERE." I can just as easily say that the Bush tax cuts brought us to the left of the center as a Republican can say that the Bush tax cuts bring us into the center from off on the right.
Or you can merely look at the regression data that the Laffer Institute has gathered carefully over the course of the last 30 years.
And even so, this isn't an application of the Laffer curve. They are purposefully cutting government income in order to reinvest in the national economy, causing economic growth. Then they raise the taxes again later (or not...) when there is more around to tax. Completely different situations.
True. Nonetheless, the principle is quite sound.
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We're totally different from France.
