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(Bloomberg) — The French government is weighing fresh taxes on corporates to cut the country’s budget deficit, newspaper Le Monde reported.
The finance ministry is considering a 8.5% temporary extra tax on companies with more than €1 billion ($1.1 billion) in revenue, and a tax on stock buybacks equal to 8% of the nominal reduction in capital, according to documents cited by Le Monde. Personal income taxes would remain stable and there would be cuts to public spending, the daily said.
Michel Barnier, the right-wing prime minister appointed earlier this month by Emmanuel Macron, will lay out his objectives in a policy speech to the parliament on Tuesday. He is readying the 2025 budget bill, which is expected be presented around Oct. 9.
Adding pressure on Barnier, 27 lawmakers from Macron’s party published a column in La Tribune on Saturday opposing tax hikes, saying that the move risked breaking with the president’s pro-business mantra of not increasing levies on corporations and wealthy households.
A spokesperson for the finance ministry declined to comment on the Le Monde report, saying no decision has been made. A spokesperson for Barnier didn’t immediately return a request for comment.
The new finance and budget ministers warned last week that the budget deficit has widened much more than expected, exceeding 6% of GDP this year. They pledged to take tough action to prevent France from losing its status as one of the safest bond markets in Europe.
The country has been in upheaval ever since Macron called snap elections in June, a bet that backfired as it returned a National Assembly split between three bitterly divided blocs incapable of governing alone, and Macron lost his relative majority.
Barnier, the Republican prime minister he picked after hesitating all summer over appointing a government that wouldn’t immediately be toppled in a no-confidence vote, is now faced with the threat of Marine Le Pen joining or filing a no-confidence vote backed by the left. He’s also coming under pressure from some lawmakers inside Macron’s party, with the head of the group Gabriel Attal, a former prime minister, previously calling tax hikes a red line.
The government could potentially introduce a rectification finance bill to adopt the measures as early as this year, Le Monde said. The bill could include the 8.5% exceptional contribution on corporate benefits, which would bring the total tax rate on corporate profits to 33.5% — the level that was in effect before Macron’s tax cuts. This could bring in €8 billion, according to the newspaper.
A tax on share buybacks would also apply to companies with turnover of over €1 billion. The Prime Minister’s office plans to deduct 8% from the nominal amount of the capital reduction, bringing in €200 million a year, Le Monde reported.
Barnier is also considering higher rates on a levy known as ecological bonus-malus or an environmental tax for cars, one on on heavy vehicles, and on renting furnished housing.
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