The French government has promised $11 billion of tax cuts in its 2020 budget.
Faced with a slowdown in growth across Europe, France’s finance minister Bruno Le Maire said more spending was the only way to boost investment and consumer confidence.
The cuts are designed to benefit households in particular. Many low-income families are still struggling to make ends meet and President Emmanuel Macron’s government wants to quell any future unrest that could derail its economic reforms.
Macron faced a backlash at the end of last year against his pro-business stance, which resulted in some of the worst street violence in decades.
The 2020 package is made up primarily of $5.5 billion in income tax cuts that have already been announced. The rest will come in a further cut in taxes that people pay on their primary residence – worth $4 billion – and the extension of a tax exemption on overtime pay.
But a financial watchdog has criticized France’s failure to stick to promises to tackle the country’s long-term budget deficit.
Macron’s government had intended to cut considerable public spending – but it doesn’t want to face more public protests and strikes.
However, the finance minister has insisted that, despite the extra strain from the 2020 tax cuts, the government still expects its public-sector budget deficit to fall next year to 2.2 percent of GDP, which would be the lowest since 2001.