France considers tax increase for big companies, Le Monde reports

France's new Prime Minister Michel Barnier is considering a temporary increase in corporate tax on the country's biggest companies as well as a tax on share buybacks as part of efforts to plug a gaping hole in public finances, Le Monde newspaper reported on Sunday.

Why it's important

Barnier, who took office earlier this month, already finds himself facing a growing budget crisis as tax income is weaker than expected and spending higher than planned.

France's credibility with financial markets, where its borrowing costs have surged, and its European Union partners is on the line.

By the numbers

Le Monde says the 2025 budget could include an 8.5 percentage point increase in corporate tax for companies whose annual turnover is at least 1 billion euros ($1.1 billion). The tax would be temporary and could yield 8 billion euros in 2025.

Other possible measures include a tax on share buybacks.

Context

The new government lacks a parliamentary majority, and getting the budget adopted will be tough. Even parties that are in government don't agree on whether tax increases are an option.

The previous government had planned to cut the fiscal shortfall to 3% of GDP by 2027, but weak tax revenues and budget overruns have put that target all but out of reach.

What's next

Barnier needs to finalise the 2025 draft budget in days and hand it over to lawmakers by mid-October at the very latest.

The response

The prime minister's office and finance ministry could not immediately be reached for comment. ($1 = 0.8958 euros) (Writing by Ingrid Melander; Editing by Emelia Sithole-Matarise)