François Villeroy de Galhau said in an interview with “Le Parisien” on Tuesday, September 17, that the reduction in government spending should be accompanied by a temporary increase in taxation for the wealthiest. Michel Barnier is also considering this scenario but is facing opposition within his fragile coalition.
The Governor of the Bank of France does not beat around the bush. During an interview given on Tuesday, September 17, to ParisianFrançois Villeroy de Galhau wished “lifting the taboo on tax increases” in order to bring the public deficit back below the symbolic 3% mark by 2029. According to him, it is necessary “find 100 billion euros out of five, or 20 billion euros per year.” A rebalancing of finances that the 65-year-old senior civil servant estimates on BFMTV at around “three quarters of the effort, at the state level but also local and social spending” and the remaining quarter through tax increases. He specifies that this must be achieved through an improvement in “the efficiency of operating expenses while preserving expenses that prepare for the future. It is not a question of generally reducing expenses […]this is not austerity.”
For him, “France no longer has the means for these unfunded tax cuts” which have been deployed since 2017. “They are increasing the deficits even more, which is increasing the concern of the French, of economic players. This is not bringing the expected stimulation,” he analyzes. A budgetary situation which calls for “tax justice” with “an exceptional and reasonable effort on certain large companies and certain large taxpayers” without touching “to the middle classes nor [aux] SME». Villeroy de Galhau wants Parliament to tackle “certain tax loopholes [qui] benefit larger groups and more affluent households more” as well as to “certain exemptions on fuels [qui] actually encourage the consumption of fossil fuels.”
Renaissance and the Republicans in troubled waters
Statements which come at a time when Michel Barnier, alarmed by the budgetary situation “very serious”, is also considering increasing taxes. A line of work that is blocking the presidential camp. Macronie, which makes its fight against tax increases a political dogma, even for the wealthiest, makes its participation in the government conditional on a promise not to touch taxes. Gérald Darmanin is demanding that the new tenant of Matignon clarify his positions before his general policy statement. Gabriel Attal is also increasing the pressure on his predecessor and demanding a “restricted delegation” to have a “clear visibility” on the increase in taxation and on the “major government balances»“These two points are essential to the success of this future government and therefore to our participation,” he adds. The meeting that was to take place this Wednesday morning has been postponed.
On the Republican side, the situation is embarrassing. After campaigning on a tax cut, the right is now thinking about using high incomes and healthy companies to clean up the public accounts. Some LR elected officials, close to Michel Barnier, are considering the possibility of re-establishing the wealth solidarity tax (ISF), reports the Parisian. A headache for the new Prime Minister, torn between his supporters and public finances.
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