PARIS (Reuters) – France’s new Prime Minister Michel Barnier, who will outline his policy plans in a much-anticipated speech to parliament on Tuesday, is planning billions of euros of tax hikes, local media said.
Barnier, who was appointed last month, needs to plug a major gap in public finances, at a time when a fragmented parliament, and infighting within the minority government, will make it hard to push through reforms.
At stake is France’s credibility with its European Union partners and in financial markets, where its borrowing costs have surged.
According to Le Parisien newspaper, Barnier is considering tax hikes of 15 billion to 18 billion euros ($16.71-20.06 billion).
That would include an additional 8 billion euros through taxes on corporations, which Le Monde newspaper reported at the weekend, and the imposition of an additional 3 billion euro levy on energy companies and share buybacks.
The plans also include significantly raising income taxes for top earners which would bring in some 3 billion euros, and increasing electricity taxes for another 3 billion euros, Le Parisien said.
The report suggested that Barnier intends to postpone France’s achievement of the euro zone’s common 3% deficit target to 2029 from 2027.
Barnier’s office did not immediately reply to a request for comment.
Budget minister Laurent Saint-Martin said last week that the hole in public finances was worse than expected, with the budget deficit at risk of topping 6% of economic output, far above the 5.1% estimated by the previous government in the spring.
Barnier is due to deliver his general policy speech in front of France’s National Assembly at 1300 GMT.
Despite looking like the most unstable French administration in recent history, despised by the left and propped up by the far-right, Barnier’s fragile minority government may last longer than many think, lawmakers and analysts told Reuters.
Marine Le Pen’s far-right National Rally, which could join forces with other disgruntled parties to topple the government at will, likely has no real interest in owning an even bigger mess that might damage its presidential hopes in 2027.
That does not mean it will be easy, in particular for the 2025 budget, which Barnier needs to finalise in days and hand to lawmakers by mid-October at the latest.
“It is not clear who will be the most obstructive towards implementing his programme: coalition partners or the opposition,” Eurointelligence analysts wrote in a note.
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(Reporting by Tassilo Hummel and Ingrid Melander; Editing by Kirsten Donovan)
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