“These tax measures will not hit the lower incomes, the middle classes and those who work,” Saint-Martin told reporters. “It is a path that rules out any tax bullying or austerity cure. There’s no ambiguity about that. We’re not going to put public finances back on track by destroying growth.”
Among the proposals were higher taxes on the wealthiest 0.3 percent of French taxpayers. Saint-Martin said that measure will only impact around 65,000 households.
But even those who aren’t hit directly by the new special taxes may feel the impact of the budget squeeze.
The government is, for instance, proposing to slash €3.8 billion in healthcare spending and to delay inflation adjustments for pensions until July. New taxes on plane tickets and polluting vehicles will likely be passed on to consumers as well.
Despite the rosy prediction from the government, France’s High Council for Public Finances, an independent watchdog, warned that the strategy unveiled on Thursday was “fragile” and overly optimistic.
Business are worried that the government’s aggressive plans could stymie growth as well, especially a proposed two-year corporate tax hike that will affect around 440 corporations with turnovers above €1 billion. Barnier’s government is also postponing several planned tax reductions for companies, raising an existing tax on electricity production, and introducing a new tax on share buybacks.