* Risk of 2014 tax revenue shortfall up to 6 bln euros -
* Says France's financial credibility on the line
By Jean-Baptiste Vey
PARIS, Feb 11 France's plans for cutting the
public deficit are at risk of getting blown off course as tax
revenues fall short of the government's optimistic expectations,
the public auditor said on Tuesday.
In its annual report, the Cour des Comptes said there was a
risk that tax revenue may come as much as 6 billion euros ($8.2
billion) short of target this year after income was
overestimated last year.
"Given the numerous uncertainties and significant risks
identified by the Cour, meeting the 2014 public deficit target
of 3.6 percent (of GDP) is not at this point guaranteed," the
president of the independent body, Didier Migaud, told
With 2013 figures not due to be published until next month,
the Cour said there was a "real risk" the deficit target of 4.1
percent for last year may have been overshot, mainly because tax
income fell short.
"Falling further behind on budget consolidation would lead
to a divergence from our European neighbours, adding
significantly to the debt burden and would gravely harm France's
financial credibility," Migaud said.
France's euro zone partners have granted Paris an extra two
years to bring its deficit in line with an EU limit of 3 percent
of economic output by 2015.
But the extension was only made on condition that France
carry out ambitious reforms, as EU Economic and Monetary Affairs
Commissioner Olli Rehn stressed on Monday in an interview with
With France's borrowing costs near record lows, Migaud said
that a one percentage point increase in interest rates would add
2 billion euros to the state's debt servicing costs, which
currently stand at about 52 billion euros annually.
The government expects tax revenue to grow 3.0 percent this
year, much faster than its 2014 economic growth forecast of 0.9
percent, the Cour des Comptes noted.
"On the basis of this growth estimate, corporate, income and
payroll tax seem too optimistic," its report said.
It said the government had overestimated tax revenues this
year by 2-4 billion euros and that new taxes were likely to fall
short by an additional 1-2 billion euros.
On the spending side of the budget, the audit office said
the government was also too optimistic about planned savings,
which would have to be compensated for.
Government plans to achieve 15 billion euros in savings this
year would only be possible if the spending leeway traditionally
built into the budget for unforeseen events was not used,
leaving no margin for unexpected expenses.
President Francois Hollande aims to pick up the pace of
budget savings in the following years to about 17 billion euros
annually to reach a total of more than 50 billion euros between
2015 and 2017.
With the government currently scrutinising each ministry's
budget for savings, Migaud urged in-depth reform rather than
pruning to rein in spending.
He offered a list of measures ripe for government attention,
ranging from over 100 million euros on shelved plans for a
second aircraft carrier to reductions offered by the SNCF rail
operator to employees' family members when they travel by train.