François Villeroy de Galhau believes that “we should not exclude” tax increases

On BFMTV-RMC, the governor of the Bank of France nevertheless asserts that a tax increase should be proportionate, targeted and temporary.

This is the debate that is stirring up the political class: should Michel Barnier’s next government proceed with tax increases to redress public finances while Emmanuel Macron has made this a red line?

According to sources confirming information from Le Parisien, the new Prime Minister is considering targeting “wealthy taxpayers and profitable companies.”

“We have too many deficits and debt”

For François Villeroy de Galhau, the governor of the Bank of France, this is an option to consider given the seriousness of the situation: “We have too many deficits and debt, we have to make compromises,” he stressed on Wednesday, September 18 on BFMTV/RMC.

“There are two very simple compromise options: we need to get back under 3% of the public deficit (against more than 5% planned for this year, Editor’s note) not only because of European rules but because it is our national interest. This is what will allow us to start to stabilise our public debt,” he explains.

“But we can’t do it in three years, it’s not realistic. In five years, it’s doable, that means an effort of around 20 billion euros per year,” continues the governor of the Bank of France.

Reducing expenditure must remain the priority

To achieve this, cutting spending or tax increases alone will not be enough, the official believes. “We need both, but in the right proportion. We need mainly savings in spending, three-quarters of the effort, at the state level, but also local and social spending, that is the priority remedy.”

For the remaining quarter, or around 5 billion euros per year to be found, “excluding” tax increases “is not wise, realistic”, indicates François Villeroy de Galhau who nevertheless insists on its targeted and provisional nature.

“If we have to make a fiscal effort on a quarter of expenditure, it would be very desirable not to touch the middle classes and SMEs because that would increase their wait-and-see attitude and uncertainty. On the other hand, we should not exclude an exceptional and reasonable effort from certain large companies or certain large taxpayers, for example as long as we have not returned to below 3% deficit, it could be a temporary effort”, explains the manager.

And to call for “getting beyond the current chaos to achieve concrete results for the French”, underlines François Villeroy de Galhau.