Measure aims to increase public funds and reduce the state deficit to adapt to European Union fiscal rules
The government of French Prime Minister Michel Barnier (The Republicans, center-right) presented this Thursday (October 10, 2024) a new proposal to increase taxes on large fortunes. The measure aims to increase public funds and reduce the state deficit to adapt to European Union fiscal rules by 2029.
The new fiscal budget expects to bring in €19.4 billion in tax increases and €41.3 billion in spending cuts. The goal of France’s new government is to raise €60.6 billion, with the majority coming from state spending reductions, to rebalance the national coffers.
Among the amounts that the Barnier administration plans to achieve, €8.5 billion will come from taxation on the profits of large companies and €2 billion from taxation on large fortunes, which is expected to affect 0.3% of the richest families in France .
The approval of the proposal by the National Assembly, however, is uncertain. Recent proposals to increase taxes and reverse previous cuts implemented since the election of President Emmanuel Macron (Renaissance, center) in 2017 have caused discontent among the population and have not progressed.
Parliamentarian Gérald Darmanin (Renaissance, center), a member of President Macron’s party, has already taken a stance against the proposal. “When you go on a slide of tax increases, everyone ends up getting hit in the end”he said.
Despite this, the prime minister will be able to use a constitutional mechanism to approve the text without a vote in the National Assembly. However, by doing so, he could suffer a motion of censure from parliamentarians and be removed from his position as a result.
FISCAL DEFICIT OF FRANCE
France is closely watched by the European Union for its lack of control over public accounts and for not following the European Budgetary Stability Pact. The agreement requires member countries of the European bloc to keep their public debt below 60% of GDP and comply with other fiscal rules.
Paris, however, has public debt of 110.6% of its GDP and is projected to reach 114% in 2024. If the country does not comply with the rules by 2029, it may be forced to pay fines of up to 1% of its GDP.
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