(Bloomberg) — Planned tax hikes to get France’s budget deficit under control will hit about 300 of the country’s biggest companies, Prime Minister Michel Barnier said.
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The increase will be temporary, for one or two years, and will be limited to companies with annual turnover of €1 billion ($1.1 billion) or more, Barnier said on France 2 television.
“We have asked the largest companies to make an exceptional, temporary effort,” he said. “And I think they can accept this effort.”
Barnier said levies on individual taxpayers would only increase for the wealthiest, which he defined as a married couple with an annual income of €500,000 or more.
Barnier’s comments detailed the broad strokes of a plan the government drew up this week for about €60 billion ($66.4 billion) in spending cuts and tax increases. The measures will be needed next year to rein in a widening budget deficit and boost investor confidence in the country. The 2025 budget will be presented to the cabinet and parliament on October 10 for debate and possible changes.
The tax hike on wealthy taxpayers will raise about €2 billion a year, Barnier said Thursday.
“This effort is justified,” he said. “I’m asking for it, and I’m not happy about it. I’d rather take the risk of being unpopular, but I don’t want to be irresponsible. I have a duty of responsibility to those who listen to us.”
Opposition to his plan is already growing. An aviation group says higher taxes on airline flights – which are reportedly being considered – would be disastrous. France’s largest business lobby, Medef, has signaled its resignation to higher taxes while calling on the state to prioritize austerity.
Earlier Thursday, Budget Minister Laurent Saint-Martin said temporary taxes to control the deficit would only hit the richest households and largest companies.
“We are talking about 0.3% of households, the richest of the richest – a household without children with an income of around €500,000 a year,” Saint-Martin said in a separate France 2 interview. “There will be no general increase in income taxes.”
President Emmanuel Macron last month appointed Barnier, a veteran center-right politician, after calling early elections that resulted in no party gaining a majority in the National Assembly.
He must approve a budget over the opposition of the left-wing coalition New People’s Front, the largest group in the National Assembly, which has promised a vote of confidence. Marine Le Pen’s far-right National Rally party has said it will not immediately support a censure, giving Le Pen significant influence.
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