France’s new government is mulling tax increases on big businesses as it seeks ways to plug a hole in public finances, Le Monde reported on Sunday.
The 2025 budget could include an 8.5% increase in corporate tax for firms whose annual turnover is above €1 billion ($1.1 billion), the newspaper wrote, citing proposals assessed by Prime Minister Michel Barnier. The so-called ‘exceptional contribution’ on the profits of large companies would be temporary and could yield €8 billion next year.
Among other possible measures is a tax on share buybacks, a practice in which companies buy their own shares to reduce their number on the market and subsequently raise their value.
A new buyback tax could bring in around €200 million, Le Monde noted. Financial services company BNP Paribas, luxury goods conglomerate LVMH, and energy firm TotalEnergies could be the target of the new levy, it added.
Barnier’s office declined to comment ahead of a policy speech by the prime minister in parliament on Tuesday, according to Reuters.
France’s public debt reached a record €3.228 trillion at the end of June, Le Monde reported on Saturday, citing the latest data from the French National Institute of Statistics and Economic Studies. The figure amounts to 112% of the country’s GDP, well above the 60% threshold set by EU regulations. Only Greece and Italy are above France in terms of general government debt among bloc members.
Barnier’s government is also under pressure to cut France’s budget deficit, which according to officials could rise from 5.5% of GDP in 2023 to over 6% this year. The European Commission has attributed France’s growing budget deficit to sluggish tax revenues on the back of lackluster growth and declining inflation.
France, the EU’s second-largest economy after Germany, had GDP growth of 0.87% in 2023 compared to the previous year. The European Commission is expecting French economic activity to remain subdued in 2024, with a forecast of 0.7% annual growth.
Budget Minister Laurent Saint-Martin said last week that the state of public finances is worse than had been expected only a few days ago. Barnier, who controversially took office earlier this month despite protests from the largest parliamentary party, is expected to present his first budget by mid-October at the latest.