Will income taxes increase if the budget is not passed, as Michel Barnier claims?

“Nearly 18 million French people will see their tax increase, others will pay it for the first time“, this is what Michel Barnier declared Tuesday evening during a interview given to TF1 and France 2. The Prime Minister launched his final arguments to try to avoid the fall of his government if the motion of censure is voted on this Wednesday in the National Assembly. According to him, if the government falls and the 2025 budget is not adopted, then 18 million French people will experience an increase in their income taxes. An assertion which caused a lot of reaction, with the opposition accusing Michel Barnier of wanting to scare the French.

A possible consequence…

However, this is what will happen if the 2025 budget is not adopted, indicates the Franceinfo True or False cell Wednesday. At least, at first. Michel Barnier draws on a report from the French Observatory of Economic Conditions, published at the beginning of October. The document questions the impact of a possible freeze in the income tax scale. This is precisely what risks happening if the 2025 budget is not adopted. In this scenario, it is the 2024 budget which will be renewed next year, with the same tax scale and therefore without taking into account the new inflation figures.

Consequence: 17.6 million households will then be affected by an increase in income taxesdescribes the Observatory report. To be more precise, 35 million French people could be affected, if we take into account that there are on average two people in a household. This increase would mainly concern the middle classes, of the order of 50 to 100 euros per year for households close to the median standard of living, i.e. 24,179 euros according to INSEE. Moreover, nearly 400,000 households would become taxable, whereas they would not be if the budget was adopted.

…but which can be corrected

However, Michel Barnier's alarmist remarks must be qualified. Since even if the 2025 budget is not adopted and that of 2024 is initially renewed, a new government will eventually be appointed and another budget will inevitably be adopted. This will allow the tax to be indexed to inflation again, retroactively. Another solution is also possible: deputies can vote on an amendment to prevent these tax increases.