France's Financial Makeover: Big Changes Ahead

France is making significant strides with its 2026 budget, aiming to tighten public finances by over 30 billion euros. This amount is roughly 1% of the country's GDP. The plan involves:

Cutting spending by 17 billion euros
Introducing new taxes worth 14 billion euros

Political Landscape and Budget Adjustments

The budget is expected to undergo substantial changes as it moves through parliament due to a divided political landscape. To garner support, the bill includes:

Suspension of the 2023 pension reform, costing:
400 million euros in 2026
1.8 billion euros in 2027

Key Tax Measures

1. Tax on Assets in Holding Companies

2% tax on non-business assets
Expected to raise 1 billion euros

2. Proposed Broader Wealth Tax

2% tax on wealth over 100 million euros
Could bring in 15-20 billion euros (proposed by left-wing politicians)

3. Temporary Tax on High Earners

Extended tax affecting 20,000 taxpayers
Expected to raise 1.5 billion euros

4. Surtax on Big Companies

Halved surtax on companies with over 1 billion euros in revenue
Expected to generate 4 billion euros (down from 8 billion euros this year)

Revenue-Generating Reforms

Freezing social benefits and pensions at 2025 levels
Pensions to rise slower than inflation until 2030
Income tax brackets not adjusted for inflation, bringing in 1.9 billion euros and pushing 200,000 new taxpayers into the system
23 tax breaks targeted, including:
School fee deductions
Key deduction for pensioners
Expected to yield 5 billion euros

Health Savings

Increase in state health insurance deductibles, generating 2.3 billion euros
1 billion euro exceptional tax on health insurers
2-euro levy on small parcels (targeting Chinese imports), expected to raise 500 million euros
Implementation of the 15% global minimum corporate tax, generating another 500 million euros