To find 30 billion in savings, Michel Barnier wants to make companies contribute with the possibility of a surcharge on corporate tax. Matignon could also take advantage of the overhaul of employer contribution reductions, intended to combat “smicardization”, to increase public revenue.
© JULIE SEBADELHAPOOLAFP
– Michel Barnier, Prime Minister, mentioned on Sunday possible “targeted” levies aimed at the wealthiest and “certain large companies”.
The equation is taking shape. As soon as he was appointed, the new Minister of Economy and Industry, Antoine Armand, immediately opened the door to targeted tax increases to redress the public accounts and close the 2025 budget.In the budgetary context, automatically excluding certain exceptional and targeted levies would not be responsible.” he said in an interview with JDD published a few minutes after his appointment, recalling however the priority of “reduce public spending and make it more efficient“.
Because the public deficit slippage is expected to be even worse than expected, with a risk of around 6% of GDP with unchanged policy, a figure well above the 5.1% target set by the outgoing executive. To find 30 billion euros in savings for next year, the government must urgently propose measures to bring the deficit back within the authorized limit.
Targeted levies on certain large companies
On the set of the 8pm news on France 2 on Sunday, Prime Minister Michel Barnier refused to “further increase taxes on all French people who already pay the most taxes of all European partners“, “neither on the poorest people, nor on working people, nor on the middle classes“However, he mentioned possible levies”targeted» targeting the most fortunate and «some large companies“Several tax measures are under consideration: freezing the income tax scale, increasing the flat tax, increasing the domestic final consumption tax on electricity.
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Attention is also focused on compulsory deductions. For businesses, two levers are being considered: reducing employer contribution reductions, and temporarily increasing the amount of corporate tax (IS) for large companies. This last proposal contrasts with the policy pursued by Emmanuel Macron until now. Since 2017, the corporate tax rate has been reduced from 33.3% to 25% in 2022, while retaining the reduced rate of 15% for SMEs, to support the competitiveness of businesses, encourage investment and support employment. Neither the level of taxation nor its duration have been set.I know that we are talking about an exceptional surcharge, but we know in taxation: what is exceptional lasts forever.“, comments Stéphanie Némarq-Attias, a lawyer specializing in tax law. It remains to be seen which companies would be targeted by this system. Matignon plans to consult with employer organizations before validating such a decision.
Reduce exemptions from employer contributions
At the same time, rumors are circulating about a possible cut in the tax relief for some companies. As a reminder, employers currently benefit from a general reduction in their social security contributions and contributions (sickness, maternity, disability, death, old age, family allowances, work accidents and occupational diseases, contributions to the national fund for housing assistance and solidarity for autonomy, supplementary pension, unemployment insurance), according to three thresholds: the first set at 1.6 times the minimum wage (a degressive reduction up to this level), the second at 2.5 times the minimum wage (a 6-point reduction in the health insurance contribution) and the last at 3.5 times the minimum wage (a 1.8-point reduction in the family allowance contribution. There are no longer any social security contributions payable by the employer for salaries at the minimum wage level.
These exemptions, introduced to support employment, are now accused of slowing down wage growth: for an employer, increasing a salary is doubly expensive since in addition to paying a higher salary, their exemptions from charges decrease. This is why two economists, Antoine Bozio and Etienne Wasmer, in a report commissioned by the former Borne government in the fall of 2023, call for “break the dynamic of constantly increasing exemptions on low wages“.
The idea would be to eliminate the reductions beyond 2.5 times the minimum wage, compared to 3.5 currently, and to reduce by 4 points the exemptions from employer social security contributions at the minimum wage level. The money thus recovered from the highest salaries could be reinvested to increase the reductions in charges for salaries between 1.2 and 1.9 times the minimum wage. The report predicts that the destruction of jobs below 1.2 times the minimum wage would be more than offset by the creation of better-paid jobs. The two economists also propose in their report to target restricted subgroups of the population, following the example of Sweden, which has set a higher level of exemption for those under 26, in order to facilitate access to the job market for the youngest.
Killing two birds with one stone
A measured increase in the cost of labor that would not destroy jobs, and would allow Bercy to collect 4 billion euros in additional revenue. This is something to delight Michel Barnier, who could well seize this work to derive a double benefit: to fight against “smicardization” by promoting the increase in salaries, and at the same time make budgetary savings.If they have difficulty talking about taxes and duties, they have less difficulty talking about contributions and charges.“, explains a source familiar with the matter quoted by The Opinion.
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