French PM Barnier signals intension to raise taxes for the wealthy

France’s new prime minister, Michel Barnier, floated the prospect of tax rises for wealthy individuals and large corporations on Sunday.

He was speaking after the unveiling of a new right-wing government on Saturday, a move that came almost three months after France’s snap election.

“I’m not going to further increase taxes on all French people, neither on the most modest, nor on people who work, nor on the middle classes. But I cannot exclude the wealthiest from the national effort to rectify the situation,” Barnier told France 2 television.

Barnier was referring to a host of economic woes inherited from the previous government, specifically a heavy debt burden.

France’s budget deficit came in at 5.5% of economic output in 2023, well above the government’s target of 4.9% and the EU’s limit of 3%.

This year, France’s public-sector deficit is projected to reach around 5.6% of GDP and go over 6% in 2025.

The overshoot, partially driven by low growth and reduced tax revenues, has already prompted disciplinary proceedings from the EU.

On top of this, rating agency S&P downgraded France’s credit score at the end of May. 

This was the first time France’s rating had slipped since 2013.

“A large part of our debt has been placed on international and foreign markets. We have to maintain France’s credibility,” Barnier warned on Sunday.

Earlier this month, he had already argued that France was in need of more “tax justice”.

Barnier’s critics have threatened votes of no confidence in the new government, as many argue that President Macron’s right-wing choice for PM doesn’t reflect the results of July’s election.

The vote saw the left-wing New Popular Front (NFP) alliance win the largest share of support, although no party was able to secure an absolute majority.

The prospect of tax rises is also uncomfortable for those within Macron’s own camp.

Last week, when the suggestion made the headlines, caretaker Interior Minister Gérald Darmanin told France 2: “It’s out of the question for us to join a government or support a government that raises taxes.” 

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Former PM Gabriel Attal, who’s now president of Macron’s Renaissance MPs in the National Assembly, told newspaper Le Point that he “will fight … to protect the French from tax hikes”.

To abide by French and EU deadlines, Barnier must present a budget for the coming year by 1 October.

In light of political fractures, it’s looking increasingly unlikely that this timeline will be met.