National Assembly Approves Special Law to Prevent Government Shutdown
On December 16, 2024, the National Assembly of France unanimously passed a special law aimed at ensuring the continuity of public services and avoiding a government shutdown. This legislation allows the government to collect existing taxes and maintain state spending at the 2024 levels while awaiting the adoption of a new budget for 2025. The law was introduced following the political turmoil that led to the censure of former Prime Minister Michel Barnier's government, which left the country without an approved budget for the upcoming year.
The special law, which received support from all 481 voting deputies, is seen as a temporary measure to bridge the gap until new finance bills can be examined in early 2025. The President of the Assembly, Yaël Braun-Pivet, ruled out amendments to index the income tax scale to inflation, a decision that has sparked controversy among opposition members. Critics argue that without this indexation, an estimated 380,000 additional households could become taxable, exacerbating the financial burden on citizens.
Controversy Over Tax Indexation and Future Budget Plans
The decision to disallow amendments related to income tax indexation has led to a heated debate among lawmakers. Opposition figures, including Clémence Guetté from the LFI party, have criticized the ruling, suggesting that the Constitutional Council should have the final say on such matters. In contrast, Braun-Pivet defended her position, emphasizing adherence to legal guidelines as advised by the Council of State.
Despite the controversy, the special law includes provisions for the government to raise taxes based on the previous year's rates and to allocate essential funding for public services. However, it restricts the government from increasing budgets for certain ministries beyond the minimum required for continuity. Notably, aid for Mayotte, which was recently impacted by Cyclone Chido, will be facilitated under this law.
Looking Ahead: Future Budgetary Challenges
As the government prepares to tackle the budget for 2025, the newly appointed Prime Minister François Bayrou will face significant challenges. The adoption of the initial finance law is expected to take several months, prompting calls from lawmakers for urgent tax provisions to be enacted quickly. Key measures under consideration include extending tax credits set to expire at the end of the year and addressing the indexation of the income tax scale to inflation.
The National Assembly will reconvene on January 13, 2025, where discussions on these critical financial issues are expected to continue. Lawmakers are advocating for a bill that encompasses these urgent tax provisions to be prioritized in the upcoming sessions.
