French Prime Minister Barnier confirms he will raise taxes for larger companies, by Reuters

PARIS (Reuters) – France’s new prime minister, Michel Barnier, will raise corporate tax on the country’s biggest companies and 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, is already facing a growing budget crisis as tax revenues are weaker than expected and spending higher than planned.

France’s credibility in financial markets, where its borrowing costs have risen, and its European Union partners is on the line.

BY NUMBERS

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

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

Barnier also confirmed he wants to push back the planned inflation-adjusted pension increase by six months to July 1, instead of January 1 next year.

KEY QUOTE

“I take the risk of being 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 passing the budget will be difficult. Even the governing parties do not agree on whether tax increases are an option.

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

WHAT’S NEXT

Barnier must finalize the draft budget for 2025 within days and hand it over to MPs by mid-October at the latest.

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