Crisis budgets: France hikes taxes, Spain cuts spending | business | Hindustan Times
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Crisis budgets: France hikes taxes, Spain cuts spending

business Updated: Sep 28, 2012 23:08 IST
Francois Hollande

French President Francois Hollande's Socialist government unveiled sharp tax hikes on business and the rich on Friday in a 2013 budget aimed at showing France has the fiscal rigour to remain at the core of the euro zone.

Meanwhile, Spain also announced a crisis budget for 2013 based mostly on spending cuts late on Thursday, in what many see as an effort to pre-empt the likely conditions of an international bailout.

The French package will recoup €30 billion ($39 billion) for the public purse with a goal of narrowing the deficit to 3.0% of national output next year from 4.5% - France's toughest single belt-tightening in 30 years.

The government said the budget was the first in a series of steps to bring its deficit down to 0.3% of GDP by 2017. Of the €30 billion of savings, €20 billion will come from tax increases on households and firms, with tax increases already approved this year to contribute €4 billion to revenues in 2013. The freeze on spending will contribute €10 billion.

Spanish ministry budgets, meanwhile, were slashed by 8.9% for next year and public sector wages frozen for a third year as Prime Minister Mariano Rajoy battles to trim one of the euro zone's biggest deficits.

The government sees budget savings of €13 billion in 2013, with spending down 7.3% and income rising 4% thanks to a 15% leap in value-added tax take.