Tax increase: Barnier has decided on income tax, here are the increases he will announce

The first decisions have been made regarding à the increase in taxes planned for 2025.

After days of various and varied hypotheses, the plan to increase taxes from January 1, 2025 is becoming more precise. The new Prime Minister, Michel Barnier, and his government have decided on several subjects, notably on the inflammatory topic of income tax. While households were worried about having to pay more to the State, the tenant of Matignon had insisted on reassure by stating that the poorest and the middle class would not have a cent more to pay.

However, there was talk of a partial increase, particularly for French people with comfortable incomes and in the highest tax brackets. The services of the Ministry of the Economy studied the question, trying to quantify what such a decision could bring into the country's coffers. Michel Barnier finally settled on the subject and should make the news official shortly, either during his general policy speech delivered this Tuesday, October 1, 2024, when his Budget Minister, Laurent Saint-Martin, will submit the 2025 budget project, around October 9.

According to the elements consulted by Le Monde, freezing the revaluation of the income tax scale was considered. But the idea was abandoned. The scale will increase at the same level as inflation in order to prevent many households from paying more taxes and others from becoming taxable. In spring 2025, income tax levels will therefore remain the same as in 2024. Relief is therefore expected for households, even if this information remains to be seen. officially confirm.

As for tax increases, these should weigh on large groups with the implementation of an exceptional surcharge, only in 2025, but also a tax on the repurchase of shares, an increase in the automobile ecotax and the end of a tax advantage on short-term real estate rentals.

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17:28 – Corporate tax could increase from 25 to 33.5%

In his desire to increase state revenues through a tax increase, Michel Barnier had declared that he wanted to tax more “those who can contribute to this effort”. Meaning: the rich and big companies. Still according to information from Le Monde60~/em>, the latter should indeed put their hands in their pockets a little more. The government is reportedly planning to increase the corporate profit tax from 25 to 33.5% for groups with a turnover of more than 1 billion euros and which are liable for corporate tax. Expected gain : 8 billion euros in 2025.

This was the point that crystallized the most political tensions: the possible increase in income tax. More precisely, the freezing of the scale which would have, mechanically, led to higher bills for households and which would have made modest households taxable. Inconceivable for many elected officials. Finally, after a detailed study of the subject by the Ministry of Economy, nothing will come of it. Le Monde says that the income tax scale will increase at the same rate as inflation, as it does every year, so as not to penalize households. Michel Barnier or Laurent Saint-Martin, his Budget Minister, should make this official shortly. 

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13:22 – Will MPs vote in favor of tax increases ?

This has been the whole question since the result of the legislative elections. Split into three large blocs, the National Assembly is more divided than ever. So, what about the 2025 budget ? Not having the support of 289 deputies (absolute majority), the government risks running into opposition from the NFP and the RN. However, he has a weapon to force the budget through: the famous article 49.3 of the Constitution. If this is used, a motion of censure can then be voted on. If it is adopted (289 votes minimum), the government is overthrown and everything starts again from scratch. If it is not adopted, the text then comes into force because this means that a majority of deputies did not oppose the government. What will the scenario be like ? The fog is still thick: will the NFP and the RN join forces ? That's the whole question for the coming weeks.

12:20 – What are the most serious tax increase options ?

As the official announcement of the future tax increase approaches, some options are becoming increasingly clear. According to Le Monde, an exceptional tax on the profits of large groups should be submitted to the vote of deputies, as well as a tax on the repurchase of shares, a higher tax on the purchase of polluting cars, as well as the end of a tax advantage on short-term rentals such as AirBnb. On the other hand, income tax, nothing should ultimately change.

Minister responsible for the Budget, Laurent Saint-Martin has officially indicated when the precise terms of the tax increase will be revealed: it will be Wednesday, October 9. On that day, the minister will present the draft budget for 2025, before it is debated in the National Assembly, then in the Senate. The main points will also be revealed during Michel Barnier's general policy speech on Tuesday, October 1.

11:23 – An impossible return of the ISF ?

The idea has been widely publicized, particularly by the left, which is promoting the measure: the reinstatement of the wealth solidarity tax (ISF). Abolished by Emmanuel Macron in 2017, it affected 358,198 households and brought in just over 5 billion euros to the Treasury last year. The replacement system – the property wealth tax (IFI) – is proving to be a much smaller tax bonanza: “only” 175,980 households have to pay it, for a total revenue of 1.9 billion euros in 2023. 3 billion less in income: not a straw, when you consider that you now have to find 20 per year. However, Michel Barnier has never spoken publicly of such a project, which would reverse a flagship measure of the first five-year term and La Tribune affirms that the return of the ISF is not on the agenda.

10:59 – Are we going to pay more income tax ? It's possible

Until recently, this was completely ruled out: beware of the possible reversal of the situation. Each year, the income tax brackets increase at the rate of inflation, so that the amount of tax does not increase if income evolves at the same rate as inflation, in order not to penalize households. However, Michel Barnier is reportedly considering freezing the evolution of the scale for 2025, probably on the highest brackets, those taxed at 41 and 45%. This would therefore concern households declaring at least 6,860 euros per month to the tax authorities.
 

10:21 – Macronists oppose tax increase

27 deputies and former ministers of Emmanuel Macron, affiliated with the presidential group Together for the Republic (EPR) oppose, in a text published by La Tribune, any increase in taxes, while Prime Minister Michel Barnier is considering making those who can contribute more, “in an exceptional and temporary manner”. "It seems to us […] unthinkable that after seven years of tax cuts, it would be the alliance of the central bloc which would end up giving up on tax cuts. stability tax to increase them, éwrite Mathieu Lef&evre; Charles Rodwell, Aurore Bergé, Marie Lebec and even Sylvain Maillard.