France Levies Billionaire Tax to Address Steepening Debt Crisis

France’s Prime Minister Michel Barnier (Wikimedia Commons)

France’s lower chamber voted to support the left-wing France Unbowed (LFI) party’s proposal to raise taxes on billionaires on October 25.

This legislation comes shortly after members of France’s left-wing government coalition and the centrist Modem party approved turning a temporary tax on wealthy households into a permanent one on October 22. The Communist, Socialist, Green, and France Unbowed (LFI) parties banded the left-wing government coalition, known as the New Popular Front Party after Emmanuel Macron ordered the dissolution of the National Assembly in June 2024. 

France’s debt crisis stood evident as the Cabinet approved a tax increase worth 19.4 billion euros and a reduction in spending worth 41.3 billion. France’s public debt has also risen to 112 percent in 2024, a rise from 98 percent in 2019, which makes France the country with the third-highest public debt in the EU. The EU requires member states to keep national debt below 60 percent, but 13 out of 27 EU members exceed this requirement. 

The new 2025 budget bill aims to raise 60 billion euros through tax cuts. Alongside increased taxes, France reduced its foreign aid budget by 1.3 billion euros, subsidies for apprenticeship by 2.1 billion euros, and subsidies for electric vehicles and insulation by 1.9 billion euros. The new tax voted on October 22 will impact households where an individual earns a salary of over 250,000 euros by a three percent increase and couples earning over 500,000 euros annually by four percent. The tax reform will also ensure that these households also pay a minimum of 20 percent in taxes.

The following October 25 tax proposal known as the “Zucman amendment” passed in parliament to levy a tax on assets that exceed one billion euros. This tax increase is estimated to raise eight billion euros. These new tax reforms come shortly after France revealed its 2025 budget bill on October 10, which includes increases in taxes and major spending cuts by 60 billion euros, intended to tackle France’s debt crisis. The French government will also cut 2,200 jobs and raise taxes on flight tickets and private jets as well as on electricity. 

France’s public debt spending has been a concern since its public debt spending rose to 6.1 percent of the nation’s GDP despite the nation’s 4.4 percent deficit spending target. Individuals have attributed France’s hike in public spending to the Russian invasion of Ukraine, the COVID-19 crisis, and inflation. Newly elected Prime Minister Michel Barnier said he would try to tackle France’s debt crisis through spending cuts and heightened taxes, with the goal of lowering France’s public sector deficit for gross domestic product from over six percent to five percent. 

Barnier previously expressed that France’s most wealthy must help alleviate the nation’s debt crisis. “I'm not going to further increase taxes on all French people, neither on the most modest, nor on people who work, nor on the middle classes. But I cannot exclude the wealthiest from the national effort to rectify the situation,” Barnier told France 2 television on September 22.

Although Macron supported a temporary tax on France’s corporations in early October, his party remains opposed to the LFI’s billionaire tax.

Maud Bregeon, a lawmaker for President Emmanuel Macron’s Renaissance party, said that the cabinet would consider implementing Article 49.3, which would allow a vote to pass without the assembly’s support, in response to the passage of the LFI’s “Zucman Amendment.”

Barnier stated in his first speech as prime minister on October 1 that the public debt crisis was an imminent problem: “A sword of Damocles is now hanging over the head of the French people and without action and courage now, it will hang much heavier over the heads of our children and grandchildren. The real sword of Damocles is our colossal financial debt.”