French Finance Minister Antoine Armand (right) and Budget Minister Laurent Saint-Martin are holding a press conference to announce the 2025 budget at the Ministry of Economy and Finance in Paris on the 10th local time, in the image shown. The French government, facing a serious fiscal deficit, announced a budget plan on the 10th to cut spending by around 40 billion euros (about 60 trillion won) and increase taxes on large corporations and the wealthy. The Ministry of Finance of France unveiled the budget plan for 2025, which was considered a major issue since Prime Minister Michel Barnier took office. According to the draft budget plan obtained by the political specialist media Politico, the plan includes increasing taxes by around 194 billion euros (about 29 trillion won) and cutting spending by approximately 413 billion euros (about 61 trillion won). The French government reportedly views this austerity budget as comparable to the large-scale austerity fiscal period initiated by President François Mitterrand in 1983.
The key point of this budget plan lies in the tax hikes on large corporations and the wealthy. Among the planned tax increases exceeding 190 billion euros, 136 billion euros (around 20 trillion won) will be collected from corporations, with 85 billion euros intended to be borne by large corporations with annual sales exceeding 10 billion euros (about 1.4 trillion won). For corporations with sales between 10 billion and 30 billion euros (about 4.4 trillion won) below, the corporate tax rate will be increased by 20.6%, and for companies with sales exceeding 30 billion euros, it will be increased by 41.2%. Financial Times reported that this would affect around 440 major corporations subject to taxation. The budget plan also includes adjustments to the income tax rates for high-income earners with annual income exceeding 250,000 euros (about 37 million won), aiming to collect an additional 20 billion euros (about 3 trillion won). As a result, approximately 65,000 households in France, representing 0.3% of taxpayers, are expected to be affected.
Prime Minister Barnier aims to reduce the public deficit, amounting to 6.1% of the Gross Domestic Product (GDP), to below 5% and eventually to meet the European Union’s standard of below 3% by 2029 through this budget plan. Consequently, the education sector is expected to see a reduction of 4,000 teaching jobs next year, with 2,200 public-sector jobs disappearing. Measures such as reducing the number of civil servants and freezing pension increases for 6 months are also included in the budget plan.
It remains crucial whether this budget plan can surpass the threshold of the current lower house without an absolute majority party. Finance Minister Antoine Armand, who has been in office for less than a month, stated that “it will undoubtedly be a difficult task” and emphasized that “this budget plan means shaking up our practices.” In particular, Eric Coquerel, chairman of the Finance Committee of the French National Assembly belonging to the far-left party La France, which is in opposition to Prime Minister Barnier’s government, together with the New Anticapitalist Party (NFP), intends to reconsider the draft budget plan in order to achieve “a more expanded tax justice and national income,” as reported by Le Monde. On the other hand, moderate lawmakers classified as part of Macron’s camp, who have pursued an active tax-cut policy, have expressed opposition to this tax increase plan that goes against Macron’s policies. Therefore, it is speculated that the far-right National Rally (RN) could be a decisive factor in the passage of the budget plan.