France to Raise Taxes on Big Firms, Wealthy Individuals

France's new PM Michel Barnier to hike corporate tax on biggest companies and wealthy individuals in the country, he said on France 2 television on Thursday, confirming earlier media reports.
French Prime Minister Michel Barnier delivers his general policy speech at the National Assembly in Paris, France, October 1, 2024.
French Prime Minister Michel Barnier delivers his general policy speech at the National Assembly in Paris, France, October 1, 2024. REUTERS/Sarah Meyssonnier
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PARIS (Reuters) - France's new prime minister, Michel Barnier, will increase corporate tax on the biggest companies in the country and on wealthiest individuals, he said on France 2 television on Thursday, confirming earlier media reports.

WHY IT'S IMPORTANT

Barnier, who took office earlier this month, already finds himself facing a growing budget crisis as tax income is weaker than expected and spending higher than planned.

France's credibility with financial markets, where its borrowing costs have surged, and its European Union partners is on the line.

BY THE NUMBERS

Barnier said the increase in corporate tax will only apply to companies with turnover of more than 1 billion euros ($1.10 billion) a year.

He also said he will propose a temporary income tax increase for households earning more than 500,000 euros ($551,450) a year. He said it could raise about 2 billion euros.

Barnier also confirmed he wants to push back the planned increase of pensions in line with inflation by six months to July 1, instead of Jan. 1 next year.

KEY QUOTES

"I'm taking the risk to be unpopular, but I want to be responsible."

"What weighs on my mind, my fear, is a financial crisis, like what happened in Italy a few years ago, like what happened in Britain."

CONTEXT

The new government lacks a parliamentary majority, and getting the budget adopted will be difficult. Even parties that are in the government do not agree on whether tax increases are an option.

The previous government had planned to cut the fiscal shortfall to 3% of GDP by 2027, but Barnier had to push back this target by two years.

WHAT'S NEXT

Barnier needs to finalise the 2025 draft budget in days and hand it over to lawmakers by mid-October at the very latest.

($1 = 0.9067 euros)

(Reporting by Michel Rose; Editing by Sandra Maler)

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