FRANCE: French PM plans new tax on people earning over $380,000 a year

French Prime Minister Sebastien Lecornu plans a tax targeting individuals with annual incomes of over €250,000 (S$380,000) to try to win the Socialist opposition’s backing for his government’s 2026 state budget, financial daily Les Echos said on Oct 4.

Les Echos reported that Mr Lecornu plans two measures, each targeting taxpayers declaring more than €250,000 in income – or €500,000 for a couple – to raise an additional €3 billion in 2026 fiscal revenue.

A first measure would be to renew a one-off tax introduced by predecessor Francois Bayrou in 2024 which aims to ensure that all high-earning tax households concerned pay at least 20 per cent of their income in taxes.

The minority government also wants to crack down on the super-wealthy’s use of holding companies as a piggy bank, it said, as part of a drive against tax optimisation.

Les Echos said the Finance Ministry had identified some 30,000 financial structures that would fall within the scope of the measure, notably for cashing in dividends but never redistributing them, so that dividend tax can be avoided.

The holding company measure is expected to yield just over €1 billion for 2026, the paper said, adding that – along with other measures – the total expected additional contribution from the wealthiest individuals would be between €4 billion and €4.5 billion.

The Finance Ministry did not immediately respond to a request for comment.

Mr Lecornu in September became President Emmanuel Macron’s fifth prime minister in two years after Parliament ousted Mr Bayrou over his plans for a €44 billion budget squeeze in 2026.

Without giving much detail, Mr Lecornu on Oct 3 outlined a wealth tax among proposals aimed at winning leftist support for the 2026 budget, which the Socialists called “insufficient” without closing the door on further talks.

With Parliament divided into three blocs, none of which has a majority, Mr Lecornu relies on rival parties to pass legislation – and for his own survival as prime minister.

The Socialists want a 2 per cent wealth tax on France’s richest 0.01 per cent in the 2026 budget as the price for their support, making Mr Lecornu’s political survival contingent on a measure that has strong public support but alienates conservatives.

“If (Mr Lecornu) is prepared to pursue a policy that… moves in the direction of greater fiscal justice, we will not (vote against his government),” Mr Raphael Glucksmann, a prominent Socialist Party member, told BFM television.