On January 23, the Senate approved the 2025 finance bill with 217 votes for and 105 against, building on prior frameworks. Key measures include temporary income tax reductions for wealthy households, penalties for thermal car purchases, and increased taxes on air travel and gas boilers. Proposed budget cuts of €800 million in development aid and reductions in housing, research, and sports budgets are included. A joint parliamentary committee will negotiate further amendments to address potential censure, aiming for a deficit reduction to 5.4% of GDP by 2025.
Senate’s Approval of the 2025 Finance Bill
On January 23, the Senate marked a significant milestone by passing the 2025 finance bill, with 217 votes in favor and 105 against. This version, presented by François Bayrou, builds on the framework established months ago by Michel Barnier. The new Prime Minister strategically chose to resume parliamentary discussions from where they left off after the previous censure, effectively buying time to advance the bill.
The Senate’s approval incorporates many measures previously announced by the former government last fall. Key features include a temporary reduction in income tax for the wealthiest households and an ‘exceptional contribution’ on the profits of large corporations. Other notable provisions involve increased penalties for purchasing thermal cars, heightened taxes on plane tickets and gas boilers, and a special tax targeting the shipping giant CMA CGM.
Budget Cuts and Proposed Changes
As the Senate, predominantly led by a right-centrist coalition, reviewed the bill, they proposed significant amendments. Among these were the abolition of the Bio Agency and the Universal National Service, as well as a cut to the State Medical Aid for urgent care for undocumented migrants. Additionally, the initial demand for local authorities to contribute €5 billion was reduced to €2.2 billion. The government has consented to major budget cuts, including €800 million from development aid, over €1 billion from housing and ecology, €600 million from research, and a reduction in the sports budget that has sparked considerable debate.
This finance bill is not yet finalized and will undergo further revisions to mitigate potential censure, particularly from the Socialist Party. A joint parliamentary committee (CMP) is set to convene on January 30, comprising seven senators and seven deputies tasked with negotiating a compromise. A successful agreement will require both chambers, starting with the National Assembly in the week of February 3, to adopt the bill. The Prime Minister retains the option to invoke Article 49.3, which allows for the passage of legislation without a vote but may trigger a motion of censure.
To steer clear of the censure threat, the government must ensure that the CMP addresses the concessions made to the Socialist Party. This includes maintaining 4,000 teaching positions, 500 positions for France Travail, and creating 924 roles within the Ministry of Justice. The Socialist Party, while previously lenient following the Prime Minister’s general policy statement, has reiterated that ‘censure is still on the table’ and acknowledges a lengthy road ahead for the budget discussions. On Thursday, they, along with the ecologists and communists, voted against the bill.
In summary, the finance bill aims for substantial savings of €32 billion and revenue of €21 billion, targeting a reduction of the deficit to 5.4% of GDP by 2025, down from an anticipated 6.1% for 2024.