French PM Barnier Confirms Plans to Raise Taxes for Larger Companies, Reports Reuters

PARIS (Reuters) – Michel Barnier, France’s newly appointed prime minister, announced on Thursday that he plans to raise corporate taxes on the largest companies and implement higher taxes for the wealthiest individuals. This confirmation came during an appearance on France 2 television, aligning with previous media reports.

Importance of the Announcement

Since taking office earlier this month, Barnier has been confronted with an escalating budget crisis characterized by lower-than-anticipated tax revenue and higher-than-expected expenditures. The situation has raised concerns about France’s financial credibility in the eyes of market investors and its partners within the European Union.

Details of the Tax Increases

Barnier specified that the corporate tax hike will target companies with an annual turnover exceeding 1 billion euros. Additionally, he plans to propose a temporary income tax increase for households earning more than 500,000 euros per year, which is projected to generate around 2 billion euros in revenue. He also indicated his intention to delay the scheduled pension increase in line with inflation by six months, moving it from January 1 to July 1.

Key Remarks

Barnier expressed, "I’m taking the risk to be unpopular, but I want to be responsible." He also highlighted his concern over a possible financial crisis, drawing parallels to events experienced in Italy and Britain in recent years.

Political Context

The new government does not hold a parliamentary majority, complicating the process of passing the budget. Even within the coalition, there are disagreements about the feasibility of tax increases. The previous administration aimed to reduce the fiscal deficit to 3% of GDP by 2027, a target that Barnier has now postponed by two years.

Next Steps

Barnier is under pressure to finalize the draft budget for 2025 and submit it to lawmakers by mid-October at the latest.