Tax increase: Barnier increases a tax by 40%, all French people will have to pay it

“Increase in taxes ;ocirc;ts: Barnier increases a tax by 40%, all French people will have to pay it”

While Michel Barnier has promised that income tax will not increase for almost all French people, he does, however, plan to increase a tax that all households will have to pay.

The French will soon know. Michel Barnier and his government are finishing work on the 2025 budget and the upcoming tax increase. While the Prime Minister has stated that the vast majority households would not pay more income tax, all French people will however have to dig deeper into their pockets due to the planned sharp increase in a tax paid by all households and from which no one can escape.

Seeking to obtain nearly 20 billion euros in additional revenue in 2025, Michel Barnier has studied many avenues. One of them, about to be validated, consists of increasing the domestic final consumption tax on electricity (TICFE) by more than 40%. In concrete terms, on your electricity bill, the share that you will pay to the State will be much higher. Today, it is 22.50 euros per MwH. On February 1, it should rise to 32 euros per MwH… And maybe more. Le Parisien suggests that the final amount could be higher. If the idea has not yet been definitively approved, the Bercy services are working on it.

Other measures include an additional tax on households that earn “approximately” 500,000 euros per year, or 40,000 euros per month for a single person or 20,000 euros per person in a couple. This concerns 65,000 people in France. Also in Michel Barnier's plans is an “exceptional participation”, for “one year or perhaps two”, on the profits of “300 companies” which “make a turnover of one billion or more”, according to the Prime Minister on Thursday evening, but also an increase in taxation on polluting transport, tax increases on electricity or sports betting, as well as a change in taxation for AirBnb rentals.

All these projects have not yet been definitively finalized. Laurent Saint-Martin, Minister of the Budget, must present all the details this Thursday, October 10, 2024. Then, the deputies will have to debate this file for only five days, between October 21 and 25. Many amendments should be tabled, but the final vote must take place on Tuesday, October 29, before the Senate votes on it. At the latest, the parliamentarians must have approved the budget by December 31.

Latest updates

14:22 – Some companies taxed at more than 30% on their profits

According to Les Echos, the tax on corporate profits could increase from 25% to 30% for companies with a turnover greater than 1 billion euros, and even climb to 35.25% for those with a turnover of over 3 billion. Then, in 2026, the rates would be reduced to 27.5% and 30%, before a possible return to 25% in 2027. This could bring 8 billion euros into the state coffers.

13:36 – A tax increase greater than under Sarkozy and Hollande ?

Will Michel Barnier increase taxes even more than François Fillon and Jean-Marc Ayrault ? Between 2011 and 2013, the former Prime Minister of Nicolas Sarkozy, then that of François Hollande, had been forced to toughen taxes to cushion the backlash from the financial crash of 2008. À At the time, the additional levies had made it possible to collect 20 billion in 2011, the same the following year and 30 billion in 2013. This time, the total revenue should be a little less than 20 billion, according to Bercy's forecasts.

12:55 – A measure that is already unconstitutional ?

There is a constitutional risk with this additional levy applied to the richest. This could lead to a confiscatory nature of the tax. In 2013, the Constitutional Council had deemed incompatible with the Constitution the 18% surtax wanted by François Hollande on incomes above 1 million euros, because it brought the marginal rate to more than 70%. A rate beyond which the tax becomes contrary to the Constitution. Michel Barnier and his Budget Minister could therefore be forced to revise their copy.

12:34 – The rich taxed at 75% ?

This is an observation made by Les Echoswhich could pose a problem. While Michel Barnier wants to increase taxes for the highest incomes, probably with an increase in the high income tax, the economic daily notes that the marginal tax rate for those concerned already reaches 66.2% (45% for income tax, 4% for the exceptional contribution on high incomes, 9.7% for the CSG-CRDS and 7.5% for the solidarity levy). If the CEHR is tripled at 9 or 12%, this would bring the marginal rate to around 70/75% depending on the household.

11:29 – The tax increases presented on October 10

Although they were finally due to be presented on Wednesday, October 9, the tax increases – and the general draft of the 2025 budget – will ultimately only be presented 24 hours later, during a council of ministers, indicated the Ministry of the Economy. Only then will negotiations with MPs and senators begin.

10:40 – Gambling also in the crosshairs

And now, it's the turn of gambling and sports betting. Les Echosclaim that the government is planning to increase taxes on the lottery, casinos, horse racing and sports betting and online poker. A complete overhaul of taxation in the sector is under consideration, with an increase in the CSG to 9.2%. In addition, social security contribution rates would increase to 10% for physical betting and gaming circles, and to 15% for sports betting, an increase of 4 to 5 points according to the economic daily. In addition, advertising expenses by professionals in the sector would be taxed more heavily. Financial objective: raise an additional 500 million euros next year.

10:13 – An increase in tax on airline tickets ?

According toLes Echos, the State is considering increasing a tax applied to airline tickets: the TSBA, for solidarity tax on airline tickets. A tripling is under consideration, according to information from the Parisien, to whom Air France has already announced that “if this project sees the light of day, there will be an impact on the price of tickets. A ticket in “business” class could cost 200 euros more on average, and “a few dozen euros” in “economy” class.

09:25 – From what salary should I be concerned? by this tax increase ?

According to the Minister of the Budget, a household without children will have to declare 500,000 euros of income to the tax authorities in order to pay more to the tax authorities. This represents 40,000 euros of salary per month for a single person or 20,000 euros per month per person in a couple.

09:12 – An “exceptional contribution” paid by the rich on their income

An “exceptional contribution” will be required from the “wealthiest French” starting in 2025. This concerns 65,000 households, which will have to pay a surplus on the exceptional contribution on high incomes (CEHR). The precise amount of the tax that will have to be paid has not yet been indicated.

09:00 – A second tax on electricity in the process of being implemented

Further down in this live, we talked about an upcoming increase in a tax on electricity. It is not one but probably two taxes that will increase on your bills. Michel Barnier could indeed announce an additional levy on households' wallets. It is obviously not presented like this, but the end result will indeed be this. Concretely, the State wants to impose on EDF (the main electricity producer) to pay an additional tax on its nuclear power plants and hydroelectric dams. Expected revenue: nearly 3 billion euros per year.

Except that EDF is obviously not going to pay for this out of pocket and should pass it on to consumers, without them realizing it. In a few months, the cost of electricity alone will drop significantly. The right time to discreetly increase the tax rate. This increase should be significant but will not prevent the overall bill from dropping. The State will be the winner and the taxpayer will not realize it, believing that, in any case, his bill will be lower.

08:50 – A tax on electricity increased by 40%

According to Les Echos and Le Parisien, the TICFE (domestic final consumption tax on electricity) could increase from 21 euros to 32 euros at the beginning of 2025. This is a tax paid when settling the electricity bill and paid to the State. Emmanuel Macron had lowered it to 1 euro during the energy crisis to stem the rise in the cost of producing electricity. As these costs are now falling, it is well considered to increase the tax again. The overall bill could still decrease, but less than if the TICFE remained at its current level. 3 to An additional 4 billion euros would enter the state coffers. Le Parisien even states that the tax could ultimately be higher.