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France Approves Tax-Exempt Savings To Fund Defense Initiatives

IBX-Jakarta. France has passed a budget bill amendment that allows the redirection of funds from popular tax-free savings accounts to support the defense industry, according to an announcement by the finance ministry on Wednesday. Due to a lack of an outright majority, the government employed special constitutional powers to push through spending legislation for the 2024 budget bill in the lower house of parliament on Tuesday, bypassing the need for a vote by lawmakers.

The 2024 budget bill, as approved by the government, includes an amendment that facilitates the utilization of deposits in widely used Livret A savings accounts to finance France’s defense industrial capabilities. President Emmanuel Macron has made a commitment to increase France’s defense expenditures in the coming years to modernize the armed forces and address emerging threats.

There are over 55 million open Livret A accounts in France, and French banks transfer 60% of the 400 billion euros in deposits from these accounts to the Caisse des Depots public lender. The Caisse des Depots, in turn, allocates these funds for social housing and urban development projects. However, there is increasing pressure to allocate these funds to other public initiatives. Earlier this year, the government floated the idea of using some of these funds to finance new nuclear power reactors.

Individuals are allowed to deposit nearly 23,000 euros into Livret A accounts, which currently offer a tax-free government-determined interest rate of 3%.