July 1, 2012 / 11:15 AM / in 6 years

French audit office sees 8 billion-euro gap in 2012 budget: paper

PARIS (Reuters) - France’s national audit office will reveal a shortfall of almost 8 billion euros ($10 billion) in this year’s national budget after discovering a 1.5 billion-euro spending gap left by the previous government and lower tax revenues, the Journal du Dimanche newspaper said on Sunday.

The audit office is due to publish on Monday the results of an official review of the public finances that new President Francois Hollande ordered.

Without citing sources, the weekly newspaper said the government would need to fill a gap of between 7.5 billion and 8 billion euros to meet its public deficit target of 4.5 percent of gross domestic product this year from 5.2 percent in 2011.

As a result the government had decided to lower the 2012 growth forecast to 0.4 percent from 0.5 percent, the paper said.

Prime Minister Jean-Marc Ayrault is due to outline the government’s strategy for restoring the health of the public finances in a speech on Tuesday before the various measures are unveiled at a cabinet meeting on Wednesday.

A government source confirmed to Reuters last week that the budget revisions would contain about 7.5 billion euros in new tax measures, including an increase in wealth tax, the abolition of a tax exemption for overtime, and new levies on banks, oil product stocks and company dividends.

The government is also planning to increase to 20 percent from 8 percent a tax on company profit-sharing bonuses paid annually to employees, the newspaper said.

In addition the audit office’s report would show a delay in revenues from value added tax entering the government’s coffers and an overestimation of expected corporate tax revenues, the paper said.

The review was also said to have discovered at least 1.5 billion euros of inadequately funded spending inherited from the previous government.

Lawmakers in the lower house of parliament are due to begin reviewing the amended budget bill on July 18, followed by senators the following week. The bill is due to return to the lower house for a final vote on July 31.

Reporting by John Irish; Editing by Greg Mahlich

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