The new French government wants to reduce the budget gap by 60 billion euros in 2025 and is preparing a temporary tax increase.
The new French government has announced a decision to raise taxes starting in 2025. The Minister of Finance Antoine Armand said this on RTL radio.
The draft budget for 2025 with specific proposals is to be released on October 10.
The goal of the French authorities is to reduce the budget deficit by 60 billion euros. This is partly planned to be done by cutting spending (by €40 billion) and partly by increasing budget revenues.
“As soon as we manage to cut spending significantly, we will need exceptional and temporary help from those with very high incomes,” Arman said. He assured that people with low and middle incomes will be exempt from the additional fiscal burden: “The income tax rates for those who go to work every day will not change.”
His government colleague, Laurent Saint-Martin, Minister of Budget and Financial Accounts, said on France 2 on Thursday that only 0.3% of the population will feel the tax increase – the richest households in France, those without children and earning an annual income of 500,000 euros.
The tax increase will also affect the largest companies.
Earlier this week, French Prime Minister Michel Barnier warned that the current financial situation in the country is a sword of Damocles hanging over every French citizen. “We need to act now to ensure a stable financial future for our country. Our debts exceed €3.2 trillion, and this is a situation we cannot ignore,” he said.
In September 2024, for the first time since the global financial crisis, the yield on French government bonds exceeded that of Spanish securities. The reason is that the budget deficit in France is too high.
Last year, it was 5.5% against the planned 4.9%, and this year it may reach 6%, which is much higher than the European Union’s limit of 3%. At best, France will be able to return to the target no earlier than the end of this decade.
Trends in the global and Ukrainian economies can be tracked via the Experts Club information and analytical channel – https://www.youtube.com/@ExpertsClub
