(Bloomberg) -- French Prime Minister Michel Barnier says tens of billions of euros of tax increases proposed by left-wing opposition parties would be “unbearable” as they would undermine business and households’ purchasing power.
France must reduce its budget deficit to preserve its ability to borrow at reasonable rates, Barnier said in an interview with Le Journal du Dimanche newspaper published Sunday. However, the tax burden shouldn’t be increased beyond the temporary effort requested by the government from some large companies and the wealthiest taxpayers, he said.
The government is under pressure to reduce France’s ballooning budget deficit amid sluggish economic growth, while President Emmanuel Macron’s plans to narrow the gap have repeatedly slipped off course. The challenge was made harder by Macron’s decision to call snap elections in June, leaving France with a minority government that could easily be toppled by parliament.
Barnier’s government this month presented a 2025 budget bill with €60 billion ($65 billion) of spending curbs and tax increases to bring the deficit to 5% of economic output from 6.1% this year.
The National Assembly is due to begin work on the draft budget from Monday. On Saturday, the finance committee of the lower house rejected a proposal that included dozens of amendments mostly put forward by the left-wing New Popular Front alliance, which entailed new taxes on everything from corporate profits to financial transactions and household wealth.
The proposed levies would have fetched about €60 billion in fresh receipts from “super profits” of large companies, the wealthiest households and “capital income,” Eric Coquerel, chair of the National Assembly’s finance committee, wrote in a post on X. The amended budget bill was rejected due to an alliance of lawmakers who back the government and of the far-right National Rally, according to Coquerel, who’s a member of the left-wing alliance.
While lawmakers of the National Rally obtained “nice victories” for the purchasing power of the French, the extreme left chose to burden the budget with several billions of euros in new taxes, Marine Le Pen’s party replied.
The government is open to discussing ways to better protect small pensions, Barnier told the Journal du Dimanche. In case of a gridlock in the budget talks, the premier said he could use article 49.3 of the constitution to bypass a vote in the National Assembly.
Such a move increases the likelihood of no-confidence motions.
Boosting small pensions before an increase planned for next July would require the government to find savings elsewhere, Budget Minister Laurent Saint-Martin said in an interview with France Inter radio Sunday.
Asked about a proposal made by some lawmakers of Macron’s party that the government sell stakes in listed companies such as lottery operator La Francaise des Jeux SA, telecom operator Orange SA and carmaker Stellantis NV, the budget minister said he’s “not opposed” to having “a discussion” in Parliament, and to reviewing the relevance of the state’s holdings.
While such asset sales would help curb France’s public debt, they would deprive the government of dividends from its holdings in the future, Saint-Martin pointed out.
(Updates with budget minister’s comments on potential asset sales from eighth paragraph.)
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