PARIS, Feb 2 (Reuters) – France closes the chapter on months of budget negotiations on Monday when no-confidence motions against the government are expected to fail, allowing the 2026 fiscal plans to pass.
The budget aims to cut the fiscal deficit to 5% of gross domestic product this year from an estimated 5.4% last year, after concessions to the Socialists forced the government to retreat from an original target of 4.7%.
MAIN TAX MEASURES
Big companies: A surtax on firms with over 1 billion euros ($1.19 billion) in revenue will be extended, generating 7.3 billion euros.
Wealth tax: A 20% levy on assets in holding companies not used for business purposes, such as racehorses, yachts or private jets. The government expects it to raise 100 million euros.
High earners: A temporary tax on top incomes will be extended, affecting 20,000 taxpayers and raising 650 million euros.
Income tax: Brackets will be increased in line with inflation. The government’s original draft budget would have frozen income tax brackets, which it hoped would bring in an extra 1.9 billion euros.
Small parcels: A 2-euro levy on small parcels, targeting Chinese imports, is expected to raise 400 million euros.
SPENDING
The government said cuts will amount to 9 billion euros in 2026, affecting all but the interior, justice and defence ministries. That is nearly half of the 17 billion euros in savings it initially targeted.
Public spending is expected to ease slightly to 56.6% of economic output from 56.8% last year though it will remain among the highest in the world.
The defence budget will receive an extra 6.5 billion euros as part of a multi-year military build-up.
($1 = 0.8435 euros)
(Reporting by Leigh ThomasEditing by Ros Russell)
