No “red lines”, but “convictions fortes”. François Bayrou’s ministers continue, Thursday January 9, their consultations with the different political forces to try to find compromises on the 2025 budget, of which France is deprived due to the censorship of Michel Barnier’s government in early December. With a public deficit expected between 5% and 5.5% of GDP at the end of the year, the government is at the foot of a “Budget Himalayas”according to the Prime Minister.
To rectify the accounts as quickly as possible, the government team has chosen to start from the text which was examined in the Senate in the fall and hopes to have its roadmap adopted “during February”. Several measures from the previous government should therefore be retained, even if the Minister of the Economy, Eric Lombard, promises a budget “profoundly transformed”. Here are the main proposals on the table.
Reductions in public spending
The Minister of the Economy insisted on the reduction in public spending which will constitute the“essential” of the 50 billion euros in budgetary effort envisaged by the new government for 2025 – a figure lower than the 60 billion euros that Michel Barnier expected to release.
Asked Monday on France Inter about the 4,000 cuts in teaching positions planned in the previous government’s project, Eric Lombard replied that “that [faisait] part of the subjects under consideration and which will be decided”. At the beginning of December, senators adopted an amendment limiting these cuts to 2,000 positions, recalls Public Senate.
The savings requested from communities will be maintained, but reduced compared to the 5 billion initially desired by Michel Barnier’s government. “I think that the last agreement which provided for around 2 billion euros in savings is a courageous agreement”, estimated Sunday in an interview with Parisian the Minister of Public Accounts, Amélie de Montchalin, in reference to the amount defended by the right-wing senatorial majority.
A contribution from large companies
On the tax side, the government wishes to defend the exceptional taxation on the profits of large companies proposed by the previous team. “This mechanism (…) was discussed with companies, notably Medef” et “it was accepted as a gesture of solidarity”, a assured the Minister of the Economy. This measure should bring in some 8 billion euros in 2025, according to Eric Lombard. An estimate identical to that of Michel Barnier’s government.
The system planned to increase corporate tax for companies with at least 1 billion euros in turnover in 2024. However, due to the legal principle of “non-retroactivity”, Parliament cannot vote in 2025 tax rules that would apply to 2024 profits, as explained Les Echos. “We will find the solution, it doesn’t matter, the principle remains”assured Eric Lombard, who believes that this contribution could be established on “a different tax base”.
An “action plan” against the “tax over-optimization” of the wealthiest
The exceptional contribution on high incomes, which was also proposed by the previous government in its draft budget and which was to generate 2 billion euros, will not be “preserved as is”, announced Eric Lombard. Always for questions of “non-retroactivity”, it could not be applied to 2024 income, according to the Bercy tenant. “We can find mechanisms that aim to ensure that people who have significant income participate in the tax effort”added the minister, who sees it as a field of “possible convergences” with socialists, ecologists and communists on the subject of “justice fiscale”.
-The Minister of Public Accounts, for example, proposes tackling the “suroptimisation fiscale”. If tax optimization, which consists of taking advantage of tax rules to reduce the amount of taxes to be paid, is not illegal, Amélie de Montchalin wants to fight against “the taxes which are sometimes not paid because you create holding companies, because you make very complex arrangements”. “You have [hauts] income, have you paid the taxes that all other French people pay? If not, you pay the difference.”she launched Monday on France 2. For the moment, she has not further detailed her proposal and refers to a “plan d’action” in the coming weeks.
A reflection on an increase in the “flat tax”
The government is also considering increasing the single flat-rate levy on capital income, also called “flat tax”, the rate of which has been set at 30% since 2018. “This is one of the subjects that are on the table” et “no decision has been made one way or the other”declared the Minister of the Economy. “In developed countries, the flat tax is between 30% and 35%”, SO “we would have a little margin”he argued. In November, the Senate voted for an increase in this rate to 33%.
No tax increases for the middle classes
The Minister of Public Accounts has ruled out tax increases “which would penalize the purchasing power of the middle class”. “VAT is therefore not an option considered”, she told Parisian.
Furthermore, the government plans to increase the income tax scale to take inflation into account. Due to the lack of a budget voted at the end of 2024, this revaluation could not be implemented on January 1st. As a result, 619,000 people, who were not previously subject to tax, risk being subject to this tax, according to the Ministry of the Economy, if the scale is not updated by the opening of the tax return campaign in the spring.
Taxes on airline tickets and share buybacks
In addition, the government wants to maintain the increase in the tax on airline tickets that appeared in the previous government’s draft budget. By the fall, several airlines had already started to pass this increase on ticket prices in advance. After Michel Barnier’s censorship, they finally committed to repaying these overpayments.
The introduction of a tax on share buybacks should also be retained. For a company, the repurchase of shares consists of acquiring its own securities listed on the stock exchange on the market, in order to reduce the number of shares in circulation and therefore to increase the value of each security. Michel Barnier intended to penalize companies which use this practice and whose turnover is greater than 1 billion euros. He hoped to generate 200 million euros in revenue in 2025.
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