The Senate opposed Tuesday evening, November 26, 2024, a key provision of the government's 2025 budget authorizing the latter to increase electricity taxation to tax it at a level higher than the pre-energy crisis period.
A very large vote by show of hands, with voices from both the right and the left, allowed the upper house to reject this measure in the finance bill, for which the government hoped to obtain more than three billion euros. The senators notably compensated for this measure by an increase in the gas tax, for a gain estimated at 1.2 billion euros.
This is a first major setback for Michel Barnier's government on this budget in the Senate chamber, a chamber which supports it, while threats of censorship targeting the Prime Minister are becoming more and more pressing.
“The government took the easy way to find new revenue: tax electricity again. This measure is socially unjust”particularly annoyed the socialist Thierry Cozic.
The general rapporteur of Les Républicains Jean-François Husson defended the same deletion, while matching it in return for an increase in the tax on gas, in particular to favor low-carbon energy such as electricity.
According to him, the bill for households heated with gas would increase “around €60 per year” for a house of 100 square meters, while “for the same house heated with electricity”the shortfall would reach “200 to 300 €” with the government proposal.
Drop promise
The government, in search of savings in its budget, gave an unfavorable opinion to this rebalancing.
“We prefer an increase in the TICFE (electricity tax) with a continued reduction in the electricity bill; to an increase in the gas tax which would de facto increase the bill for our fellow citizens”launched Budget Minister Laurent Saint-Martin, recalling that the government has ” engaged ” to reduce electricity bills by 9% on February 1 for 80% of French people.
This promised reduction is in fact made possible by the fall in wholesale prices on the electricity market, which will allow the government to increase the tax on electricity without bills ultimately increasing.
The executive had thus introduced into its draft budget a mechanism allowing it to raise this tax to a level potentially higher than that before the crisis.
In the Assembly, a coalition of oppositions with the right also voted against the measure, even rejecting the entire article relating to electricity taxation.
The National Rally has notably made this measure one of its red lines with a view to censoring the Barnier government.
High income tax
The senators also voted, in the 2025 budget, the “differential contribution” on high incomes proposed by the government, but also adopted a series of measures against the advice of the executive to raise several taxes on capital such as the “flat tax” and the “exit tax”.
The afternoon started rather well for the Minister of the Budget, Laurent Saint-Martin, who saw the Senate validate almost without modification the tax on high incomes, supposed to bring in 2 billion euros per year until 2027.
Unlike the deputies, who had decided to make this new tax permanent on the wealthiest, the upper house of Parliament adopted the initial version of the executive which limits its scope to three years, “until the taxation of income for the year 2026” payment of which will therefore take place in 2027.
The minister, however, said ” open ” has ” maintain ” this collection “as long as the country's public deficit has not returned to 4%”as he had already suggested two weeks ago to the National Assembly.
On the other hand, he considered that there was no “no need to modify” the content of this “tax justice measure” which establishes a minimum rate of 20% on income above €250,000 per year for a single person and €500,000 for a couple without children.
The attempts of the left, a minority within the upper house, to extend this « contribution » to the highest assets have conversely remained in vain. “We know very well that these assets largely escape taxation”lamented socialist Florence Blatrix-Contat.
Dog-eared totems
In the process, however, the minister suffered a series of setbacks. First on the “exit tax”, a mechanism targeting capital gains created under Nicolas Sarkozy to deter tax exile, but emptied of its substance by Emmanuel Macron who reduced the deadline from 15 to 2 years.
Duration that the senators decided to double to 4 years when the profits come from a company having received at least €100,000 in public aid. “The time has come to correct a French tax avoidance system, particularly for the largest companies”explained centrist Bernard Delcros, whose group tipped the scales by rallying to the left to pass this amendment by 173 votes to 167.
Same configuration a little later on another emblematic reform of the Head of State: the “flat tax”, also called “single flat rate deduction” (PFU) and which has capped the drain on capital income, such as dividends or life insurance, at 30% since 2018. Rate raised to 33%, by 174 votes from the left and center against 167 from the right and the Macronists. With an expected gain of 800 million euros according to the radical group RDSE, which carried the amendment.
Third damaged totem: the real estate wealth tax (IFI), also put in place seven years ago to replace the former wealth solidarity tax (ISF).
If the left has once again failed to reestablish the ISF, a broad consensus has emerged on all benches to rename the IFI “tax on unproductive wealth”with a considerably expanded scope: building land, cars, yachts and planes, but also cryptocurrencies, savings accounts and bank accounts.
