The recent adoption of the budget bill by Prime Minister François Bayrou has sparked discussions on its implications, especially in sectors like construction facing uncertainties due to unrenewed state subsidies. While the budget aims to stabilize public finances and reduce the deficit, critics warn of austerity measures. Notably, increased taxes on airline tickets have raised concerns in the business sector, with calls for the funds to support aviation decarbonization rather than general infrastructure.
Budget Bill Adoption and Its Implications
The budget bill has officially passed! On Wednesday, February 5, the Prime Minister François Bayrou invoked Article 49:3 of the Constitution, allowing the government to adopt the budget without parliamentary voting. The Senate ratified this decision the following day. The absence of the 2025 Budget is beginning to impact various sectors, particularly construction, where state subsidies like Ma Prime Rénov’ have yet to be renewed. This uncertainty is causing delays in consumer projects and creating a sense of apprehension, hindering numerous initiatives. However, stakeholders in housing and development are optimistic about the new measures supporting first-time buyers, including the extension of the PTZ and tax exemptions on donations up to 300,000 euros, as reported by AEF Info.
Key Fiscal Measures and Industry Concerns
This budget introduces several recovery plans aimed at stabilizing public finances and reducing the public deficit to 5.4% of GDP. Critics argue that it signals a return to austerity, opposing various decisions within the bill. Among the significant fiscal changes are an increase in the income tax scale, tax exemptions on tips, and heightened penalties for polluting vehicles. Additionally, a special levy on large corporations’ profits and provisions to support the agricultural sector are included. A noteworthy point of contention is the proposed increase in the solidarity tax on airline tickets, which is likely to spark dissatisfaction.
The business sector is particularly uneasy about this tax hike. Originally established in 2006 to fund international aid initiatives, this tax—often referred to as the ‘Chirac’ tax—will see an increase from 2.63 euros to 7.30 euros for economy class tickets to France and other European destinations. Although the government initially sought a higher increase, negotiations resulted in a scaled-back proposal. This adjustment could still generate between 800 and 850 million euros for the state, depending on the traveler’s distance and class selection.
According to actu.fr, the tax will rise to 15 euros for intermediate destinations (outside Europe, under 5,500 kilometers) and soar to 40 euros for long-haul flights exceeding 5,500 kilometers, applicable only to economy class. For business class, the tax implications differ significantly due to technical variances related to aircraft engines. This could translate to taxes of up to 220 euros for European travel, 675 euros for intermediate trips, and as much as 2,100 euros for long-haul flights. Minister of Public Accounts, Amélie de Montchalin, emphasized this adjustment as a step toward ‘fiscal and ecological justice,’ highlighting that the wealthiest 20% account for over half of air travel expenditures.
As airlines brace for the impact of this tax increase, concerns arise that it may deter travelers and businesses that need to manage employee travel. The head of Air France KLM recently remarked on the potential for France to become the most heavily taxed country for air transport in Europe. He urged that any tax increases should directly fund the decarbonization of the aviation sector, criticizing the measure as irresponsible, especially since the funds would also support rail infrastructure.
If you’re looking to save on airfare, consider booking your tickets during the week rather than the weekend. Optimal times to purchase include early mornings on Tuesdays and Thursdays between 4 a.m. and 6 a.m. By taking advantage of lower demand, you can secure more affordable prices!