However, Antoine Armand, the Finance Minister, confirmed the tax raid would be “limited in time” and would spare low- and middle-earners.
France is looking to improve its financial situation by €60 billion ($106b) in 2025, in the hope of bringing its deficit – the difference between public sector spending and state income at any one time – down to 5% of GDP from this year’s estimated 6.1%.
Slightly more than two-thirds of the total savings are to come from spending cuts at ministries, local authorities and the social security system.
Just under €20b ($35b) will be generated by temporary tax increases for wealthy individuals and large companies, as well as increased green taxation.
“Once we have managed to cut spending significantly, an exceptional and temporary effort will be required from those with extremely high incomes,” said Armand.
“Large and very large companies” will also be asked to pay higher taxes, he added, but he ruled out such an extra burden “lasting for several years”.
Civil service jobs
When elected for his first five-year term in 2017, Emmanuel Macron unveiled a plan to cut 120,000 civil service jobs – but this failed to materialise.
In its report, the state auditor recommended a gradual reduction in the local authority workforce – currently around two million people – back to the numbers employed in the early 2010s.
This would mean a loss of 100,000 jobs and would save €4.1b (£$7.23b) a year from 2030. Local authorities accounted for almost 18% of French public spending in 2023, and staff costs made up one-quarter of their spending, said the auditor.
The report warned there had been an increase in staffing at larger “inter-communal” authorities, those which manage several towns and villages, with no balancing fall in employee numbers at smaller local councils.
It added that staff numbers had “increased significantly” even though authorities had not been given more responsibilities.
‘Brutal cuts’
Local officials were unhappy with the auditor’s proposals.
David Lisnard, chairman of the Association of French Mayors (AMF), insisted the inter-communal bodies had been given new duties, not previously fulfilled by the smaller local authorities.
The AMF also condemned the “brutality” of proposals to consolidate and pool expenditure between local authorities, potentially saving €5b ($8.8b) a year, saying they would weaken the authorities to an “unprecedented” extent.
Johanna Rolland, the president of the France Urbaine group of local authorities, said: “We cannot support a proposal that would result in slashing local authority budgets.”
During his first major policy speech on Tuesday, Barnier said his administration aimed to reduce the deficit to the EU limit of 3% of GDP by 2029, taking two years longer than previously planned.
As for public debt, a government source said it could grow to close to 115% of GDP next year, before gradually declining.
Barnier’s Cabinet is to examine the 2025 budget proposal on October 10, and the draft law will then be submitted to Parliament.
