taxes, pensions… the Barnier paradox

To restore public finances, Michel Barnier’s government is banking in particular on an increase in taxes for large companies and the richest and on the postponement of the indexation of retirement pensions to inflation. Measures not really in the DNA of the right.

The government presented the finance bill on Thursday, October 10, with an effort of 60 billion to straighten out the public accounts, including 20 billion in additional revenue. We therefore had to wait for the right to return to power to see taxes start to rise again. After a 12-year course of opposition, let us recognize that this change of direction does not really correspond to its original DNA. We are definitely living in a political period full of surprises. Of course, the government does not touch the income tax, but it is considering a contribution “exceptional” on high incomes – tax households whose income is greater than 500,000 euros for a couple – and taxation, which is also intended “exceptional”for 440 large companies, whose turnover exceeds one billion euros.

For seven years, Emmanuel Macron had made lower taxes the totem of his entire economic policy. The Prime Minister is breaking this taboo. Basically, Michel Barnier is the anti-Sigmund Freud: at 73, he no longer has any totem or taboo.

He is taking a real political risk. First on a symbolic level, beyond damaging Emmanuel Macron’s pro-business credo, it dampens the enthusiasm of the business world which was rejoicing at the return of the right. Relieved to escape the purge of the New Popular Front, business leaders are going to drink the Barnier potion. It will not only affect the largest groups. Tax reductions and aid for all businesses are postponed, or called into question, for example those linked to apprenticeship, another totem of macronism. Michel Banrier finally lifts a final taboo by postponing by six months, from January 1 to July 1, 2025, the indexation of pensions to inflation. At the risk of angering retirees, a category which demonstrates little, but which votes a lot. However, let us remember that the government lives under the threat of a new dissolution from next June.

In terms of cuts in public spending, Michel Barnier’s choices are more classic for a right-wing Prime Minister. Starting with the elimination of 4,000 teaching positions, which the government justifies by the drop in student numbers, a decision to be opposed to the sanctuarization of the sovereign, army, police and justice sectors. Michel Barnier also knows that he must take care of his right, in Parliament and in the country, if he wants to stay in the ring for a long time.