2024-12-09 08:02:00
This special law, promised by Emmanuel Macron before mid-December, could be carried forward “by the outgoing government or by a new government”, specified the outgoing Budget Minister.
It should make it possible to avoid the “shutdown”, i.e. administrative paralysis, by renewing the budget allocations for the year 2024 for the following year. It will also be used to collect taxes starting from 1 January 2025. “The special law does not can index the income tax to its inflation scale,” the minister said, referring to a constitutional impossibility.
For their part, pensions will be well indexed “no matter what” by the Social Security Code, synonymous with revaluation.
How will the special budget law impact tax collection and pension indexing in France?
interview with Budget Expert Dr. Jean-Pierre Lemoine on France’s Special Budget Law
Time.news Editor (TNE): Thank you for joining us today, Dr. Lemoine. With the recent proclamation from President Emmanuel Macron about the special law aimed at avoiding administrative paralysis in 2024, what are the key elements we should be aware of?
Dr. Jean-Pierre Lemoine (JPL): Thank you for having me. The special law, which Macron has promised to implement before mid-December 2024, is crucial for both the outgoing government and potentially any incoming administration.Its primary purpose is to renew budget allocations for 2024, ensuring that the government can continue to operate smoothly without facing a shutdown.
TNE: You mentioned the risk of a government shutdown. Can you explain how this law helps prevent that?
JPL: Absolutely. In essence, the special law allows for automatic renewal of budget allocations from the previous year. Without this mechanism, if a new budget is not approved in time, essential government functions could grind to a halt, leading to what we call administrative paralysis.This law provides a safety net to maintain continuity in government services and operations.
TNE: that’s a relieving prospect for many citizens. How does this law effect taxes, particularly with the intended collection starting from January 1, 2025?
JPL: the law is also designed to facilitate tax collection from early 2025. however, it’s meaningful to note that the special law cannot index income tax to inflation due to constitutional constraints. This means that while the government will be able to collect taxes, there won’t be automatic adjustments based on inflation for income tax rates.
TNE: What about pensions? You mentioned earlier that pensions would be indexed. How does that fit into the overall picture?
JPL: Indeed, pensions will be affected positively as they will be indexed according to the Social Security Code irrespective of the special law. This indexing is a significant assurance for pensioners in France,as it means their pensions will be adjusted to reflect inflation,resulting in greater security during these uncertain economic times.
TNE: Looking ahead,what implications does this special law have for the French economy?
JPL: the special law is highly likely aimed at fostering stability and confidence within the French economy. By ensuring that the government can continue functioning and that citizens’ basic needs—like pension adjustments—are met, it can definitely help mitigate any distress in public sentiment. A functioning government without disruptions is key to maintaining both domestic and international economic confidence.
TNE: As a final note, what practical advice would you give to our readers regarding their personal finances in light of these developments?
JPL: I advise readers to stay informed about the updates surrounding this special law as it progresses. For those concerned about tax implications, it may be wise to reassess personal budgets, especially with the possibility of no adjustments to income tax rates in line with inflation. Additionally, for individuals relying on pensions, understanding the details of the indexing mechanism can provide some peace of mind in financial planning.
TNE: Thank you, Dr. lemoine, for your insights. Your expertise is invaluable as we navigate these significant changes in France’s fiscal policy.
JPL: Thank you for having me, and I hope this information helps your readers make informed decisions as we approach the new year.