(Bloomberg) — Planned tax increases to get France’s budget deficit under control will hit about 300 of the country’s biggest companies, Prime Minister Michel Barnier said.
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The increase will be temporary, for one or two years, and will be limited to companies with €1 billion ($1.1 billion) of annual revenue or more, Barnier said on France 2 television.
“We’ve asked the biggest companies to make an exceptional, temporary effort,” he said. “And I think they can accept this effort.”
Barnier said levies for individual taxpayers will be increased only on the wealthiest, which he defined as a couple with annual income of €500,000 or more.
Barnier’s comments provided detail about the broad strokes of a plan the government laid out this week for about €60 billion ($66.4 billion) of spending cuts and tax hikes. The measures will be needed next year to rein in a widening budget deficit and bolster investor confidence in the country. The 2025 budget will be submitted to cabinet and parliament on Oct. 10 for debate and possible amendments.
The tax increase on wealthy taxpayers will bring in about €2 billion a year, Barnier said Thursday.
“This effort is justified,” he said. “I’m asking for it, and I’m not happy about it. I’d rather take the risk of being unpopular, but I don’t want to be irresponsible. I have a duty of responsibility to those who listen to us.”
Opposition to his plan is already mounting. An aviation group says higher taxes on airline flights — reported to be under consideration — would be disastrous. France’s biggest business lobby, Medef, has signaled that it’s resigned to higher taxes, while calling on the state to prioritize spending cuts.
Earlier Thursday, Budget Minister Laurent Saint-Martin said temporary taxes to help get the deficit under control would hit only the very richest households and largest companies.
“We’re talking about 0.3% of households, the richest of the richest — a household without children that has income of around €500,000 a year,” Saint-Martin said in a separate France 2 interview. “There will be no generalized increase in income tax.”
President Emmanuel Macron last month appointed Barnier, a veteran center-right politician, after calling snap elections that resulted in no party winning a majority in the National Assembly.
He needs to pass a budget over the opposition of the left-wing New Popular Front coalition, the largest grouping in the National Assembly, which has promised a confidence vote. The far-right National Rally party of Marine Le Pen has said it won’t immediately support a censure, giving Le Pen considerable influence.
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