Personal income tax is assessed annually on a tax household’s taxable income in a given calendar year, declared the following year. Statistic shows that Personal Income Tax collected in 2007 was €49.11 billion and it is projected that €52.80 billion will be collected in 2009.The personal Income tax incorporates \individual business profits, professional profits, agricultural profits, income from real estates, income from capital assets, capital gains ,wages ,salaries ,pension and annuities. However the law provides for tax exemption putting into consideration social reasons. These exemptions are for the Taxpayers whose income net of professional expenses does not exceed €8,270 are exempt from personal income tax. For those aged over 65, this limit is €9,040 (these amounts concern income in 2008)Tax exemption are also provided under the 1961 and 1963 Vienna Conventions on Diplomatic and Consular Relations, diplomatic and consular staff of foreign nationality are exempt from personal income tax on their official remuneration and their income from foreign sources(Public Finances General Directorate,2009).
France has a prudent fiscal policy that has made it maintain and sustain its economic growth for years. This is perhaps reflected in its privatization policy which was carried out in 1990s which still provided the French government with a large control of economic activity in the country. French government spending constitutes more than 50 percent of GDP this is due to its good welfare state and extensive bureaucratic operation. This has made the government to have difficulties in many years controlling spending. In addition, the ever increasing ageing population in France will lead the government in spending lots of money on health services and pensions which will in turn increase government spending above board. However Due to economic recent economic depression the French President rejected the austerity measure that included Tax hikes and spending cuts instead embraced a expansionary fiscal policy approach unlike other European countries. Inflation rates refer to the inclusive rise in prices measured against standard level of purchasing power. The common measure of inflation rate as the CPI which put into consideration consumer prices and the GDP deflator which measures inflation in the whole of the domestic economy .Therefore France inflation reported in April 2011 stood at 2.1 percent .From statistics given from the year 1958 to 2010 the average inflation rate in France was 4.93 percent rising to the historical high of 8.80 percent in April 2009 and a record low of -0.70 percent in July 2009.