Economy and Budget Ministers Antoine Armand and Laurent Saint-Martin have validated several previously discussed options, such as postponing the annual revaluation of retirement pensions by six months

On Thursday, October 10, 2024, the government finally unveiled its Finance Bill for 2025, a week late. Laurent Saint-Martin, Minister for the Budget, and Antoine Armand, Minister for the Economy, presented the budget to the Council of Ministers and the press.

“It’s a budget that can be improved,” admitted Michel Barnier, adding that never before had a Prime Minister had to finalize a budget in just a fortnight. “It’s not possible to do everything well,” he defended himself during a visit to Poitiers.

The government has set itself the target of reducing the public deficit to 5% of GDP by 2025, after a slippage to 6.1% expected by 2024. “Our public debt is colossal,” warned Antoine Armand. The bill calls for a budgetary effort of €60 billion, with €40 billion in spending cuts and €20 billion in additional revenue. Here are the main measures:

Exceptional tax on the highest incomes
For three years, the wealthiest tax households will see their taxes rise. The bill introduces a contribution that will guarantee a minimum tax rate of 20% for taxpayers whose reference income exceeds 250,000 euros for a single person or 500,000 euros for a couple. This measure, aimed at raising 2 billion euros by 2025, will not affect other social classes, as the income tax scale will remain indexed to inflation.

Exceptional taxation of large corporations
Companies with sales in excess of €1 billion will be subject to an exceptional tax on their profits, a temporary effort that will affect 440 groups. The government hopes to generate 8 billion euros in revenue by 2025 through this measure, as well as a tax on share buybacks, expected to bring in 200 million euros. An exceptional tax on sea freight is also in the pipeline.

CVAE reduction postponed
The plan postpones the reduction in the business value-added contribution (CVAE) for three years, saving 1.1 billion euros by 2025. Other business subsidies, such as those for apprenticeships, will also be adjusted downwards, while contribution reductions will be reformed to encourage wage increases.

Public spending cuts and job cuts
A budgetary effort of 21.5 billion euros is expected from the public sector, with the elimination of 2,200 positions in several ministries and state operators. The Ministry of Education will be particularly hard hit, with 2,030 fewer jobs, but staffing levels in the Justice, Armed Forces and Interior departments will be increased.

Revaluation of retirement pensions postponed
To save 3.8 billion euros, the revaluation of retirement pensions will be postponed from January to July 2025. Other social benefits will follow the usual schedule.

Electricity tax increase
The domestic tax on final electricity consumption (TICFE), reduced during the energy crisis, will be raised to around 50 euros per MWh in February 2025. However, Bercy claims that the bill for regulated households will fall by at least 9%, thanks to lower electricity prices on the markets.

Reinforcement of the car malus
The ecological malus threshold, applicable to vehicles emitting more CO2, will be lowered. In addition, heavier cars will also be taxed more heavily from 2026. These measures are expected to generate 300 million euros from 2026.

Higher tax on airline tickets
The government plans to raise the tax on airline tickets, including private jets. This increase will be incorporated into the text via an amendment in Parliament.

Finally, the text should be completed by amendments reinforcing the budgets of Justice and the Interior, as well as the financing of French heritage.