The French government is still promising a tax bonus for the middle classes, to be announced later this week, although the state’s generosity appears to have been subject to downward adjustment.
The bonus will take the form of a rebate on taxes for 2016 but will not be paid until next year, according to Les Echos and Europe 1. Prime Minister Manuel Valls said on Tuesday morning that the total amount of the rebate will be €1 billion and a bill to that effect will be submitted to the State Council by next week.
Notwithstanding the approach of presidential elections, the Prime Minister has said he wants “to restore purchasing power to the French” and to ensure that the political left is not “identified with high tax”.
President Hollande has said that the tax cut is possible because of “fiscal space”. Earlier this year the government had forecast that the French economy could grow by 1.7 percent in 2017, but this seems very unlikely to be obtained. Terrorist attacks and Brexit have clouded growth prospects for 2017, apart from other systemic reasons including high unemployment.