France without a budget, storm on the financial markets, tax increases… The Barnier government threatened a paralysis of the French economy until the last minute. At the microphone of France 2 and TF1 on December 3, Prime Minister Michel Barnier declared that “18 million French people will see their income tax increase » if the 2025 budget was not adopted.
A few days earlier, the Minister of Public Accounts, Laurent Saint-Martin, had also raised this scarecrow. “ If we renew the 2024 budget, we automatically bring 380,000 additional French households into income tax. because the scale will not have kept up with inflation and 17 million households will also pay more “, he detailed. Contacted by The Tribune, Laurent Saint-Martin's office confirmed this figure coming from the French Observatory of Economic Conditions (OFCE).
Deficit, taxes, pensions: the risks of a France without a budget
A freeze in the scale automatically causes an increase in tax
And for good reason, in the absence of a 2025 budget voted by Parliament by the end of the year, the resigning government, but nevertheless still responsible for current affairs, would no longer be able to raise taxes. To achieve this, it could use a special law authorized by the LOLF (Organic law relating to finance laws).
Decided urgently, this special law would then cause a freeze in the income tax scale. “If there is no update of the income tax scale, there will indeed be a tax increase, in particular for households below the brackets”, confirms Simon-Pierre Sengayrac, economist at the Jaurès Foundation and public finance specialist. On the front line, households just below the 11,000 euro bracket would become in fact taxable on income. “ These households go from non-taxable to taxable status », continues the professor at Sciences-Po Paris.
According to calculations by economist Pierre Madec (OFCE), “400,000 households” would be affected by this imposition. “This is a historically rare and somewhat paradoxical situation, because freezing the scale would represent quite a significant additional tax revenue although it is not proposed or supported by any political party,” indicate Sylvain Duchesne and Lola Josseran, economists at the Institute of Public Policies (IPP). Furthermore, the other effect of freezing the scale is that households who remain in the bracket may be taxed even more. “due to the increase in their income”. Finally, the third effect is to move taxable households into a higher bracket.
Correction mechanisms
The passage of the special law, without indexing the scale to inflation, would therefore lead to an increase in taxation for 18 million households according to the economists interviewed. “ Non-indexation would bring in 3.6 billion euros », Specifies the general budget rapporteur Charles de Courson (LIOT). But several steps must be followed. The special law must first be passed by Parliament. “ I find it hard to imagine that this special law will not pass. Parliament would benefit from things not stopping », explained the president of the Finance Commission Eric Coquerel (LFI) in a recent interview with The Tribune.
Moreover, ” it is possible to pass a corrective financing law to correct the situation at the start of 2025 », underlines Pierre Madec. In addition, the tax increase would be limited. “3 billion euros in additional revenue may seem like a lot. But compared to the standard of living of households, this [les 3 milliards] corresponds to an increase between 0.1% and 0.4% […]. The impact per household is relatively low,” nuance the OFCE economist. In the midst of a budgetary slump, the Barnier government submitted for debate at the beginning of autumn a possible freezing of the income tax scale to reduce the public deficit. Which caused a flinch.
In the 2025 budget, Bercy accountants had also anticipated an increase in tax revenue relating to income tax of 2.6 billion euros taking into account the increase in salaries. The outgoing executive had certainly reversed course, but the threats of recent days have made several opposition deputies jump. “This technical budget [la loi spéciale] is not intended to become the 2025 budget,” warns Eric Coquerel, who nevertheless recalls that this law, allowing taxes to be raised, is necessary to pay civil servants at the start of the year. « More nothing prevents a 2025 budget from being passed in January “, he emphasizes. A still very confused horizon.
Budget: in the National Assembly, confusion is total
