Barthélémy Philippe / Photo credit: RICCARDO MILANI / HANS LUCAS / HANS LUCAS VIA AFP 8:28 p.m., September 17, 2024, modified at 8:48 p.m., September 17, 2024
According to Gérald Darmanin, the new Prime Minister Michel Barnier has indicated that he wants to increase taxes soon. A statement denied a few hours later by Matignon, which refers to “pure speculation”. In any case, France’s room for maneuver in this area is limited.
It was a totem for Emmanuel Macron. No question of touching the taxes of the French. And yet, this Tuesday, the resigning Minister of the Interior, Gérald Darmanin, threw a grenade with the pin pulled in front of the 97 Together for the Republic deputies. “Michel Barnier told me during our meeting that he would increase taxes,” said the tenant of Place Beauvau. For its part, Matignon speaks of “pure speculation” and assures that “no option has been decided today.”
Some are proposing this Tuesday an increase in corporate taxation, a single flat-rate levy on capital income, while others are talking about superprofits, but in reality, the room for fiscal maneuver is tiny. With its tax rate at more than 45% of GDP, France is already the European tax champion, far ahead of Germany, the Netherlands or Spain.
Reducing public spending as a priority?
Although some levies have fallen, such as production taxes which weigh on the competitiveness of businesses, they remain higher than those of our European neighbours. Cited among the potential ministers, David Lisnard advises the Prime Minister against increasing taxes: “Michel Barnier is a pragmatist. But what is certain is that there are realities. We have the world record for public spending, so it cannot be achieved by increasing public spending. We have the world record for compulsory deductions, so that cannot be the solution either.”
Especially since tax increases do not necessarily lead to additional revenue for the State. The most striking example is the flat tax, which has capped capital income taxation at 30% since 2018. Paradoxically, the tax rate has fallen, but revenue has increased. The tax weapon must therefore be wielded with the greatest caution, and Michel Barnier will probably favour reducing public spending before, perhaps, proceeding with a few tax increases in homeopathic doses.
