French Prime Minister Michel Barnier Confirms Tax Increases for Large Companies and Wealthy Individuals

Riyadh, October 3, 2024 (Saudi Arabia Breaking News) – France's new Prime Minister, Michel Barnier, confirmed on Thursday that he will raise taxes on the country's largest corporations and wealthiest individuals, as part of measures to address a growing budget crisis. Speaking on France 2 television, Barnier outlined his government's plan to increase corporate tax for companies with annual revenues exceeding €1 billion ($1.10 billion) and introduce a temporary income tax hike for households earning over €500,000 ($551,450) annually.

Barnier's tax proposals come as France faces weaker-than-expected tax revenues and higher public spending, putting the country’s financial stability at risk. The prime minister acknowledged that his decisions may be unpopular but emphasized the necessity of being fiscally responsible.

"I’m taking the risk to be unpopular, but I want to be responsible," Barnier said. "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."

The corporate tax hike targets only France’s largest companies, while the temporary income tax increase for high-earning households is expected to generate around €2 billion. In addition to these tax measures, Barnier confirmed plans to delay a scheduled pension increase, pushing it from January 1 to July 1, 2025, as a cost-saving measure.

Barnier's government, which lacks a parliamentary majority, is facing an uphill battle in getting its 2025 draft budget approved. Internal divisions remain over whether tax increases should be part of the solution, complicating the political landscape ahead of the budget submission deadline in mid-October.

France's financial credibility with markets and its European Union partners is under pressure, as borrowing costs have surged, and Barnier has had to delay his predecessor’s plan to cut the fiscal shortfall to 3% of GDP by 2027, now aiming for 2029.

Barnier’s next challenge will be finalizing the draft budget and presenting it to lawmakers in the coming days.