Paris: France’s political leadership is facing a growing storm over its budget balancing act, as key government ministers float the possibility of new tax increases targeting the wealthy and well-off retirees. While officials initially presented these proposals as temporary and limited in scope, recent developments suggest the French government may be preparing to make them permanent fixtures in the upcoming 2026 national budget.
At the heart of the controversy is a proposed 20% minimum tax rate for high-income earners — individuals making over €250,000 and couples earning more than €500,000 annually. Initially introduced in the 2025 budget as a temporary measure aimed at fiscal fairness, Economy and Finance Minister Eric Lombard recently hinted at making the tax a permanent part of the system.
“In a time when we’re asking all French citizens to make sacrifices, this contribution signals solidarity,” said Lombard in a televised interview, sparking immediate political backlash and confusion within President Macron’s camp.
Government Divided Over Wealth Tax Reform
Despite Lombard’s insistence that this is not a revival of the wealth tax (ISF) abolished by President Macron in 2017, critics within his own administration quickly distanced themselves. The Finance Ministry later walked back the comments, framing the measure instead as an anti-tax avoidance initiative.
Prominent figures such as Industry Minister Marc Ferracci, a close ally of Macron, publicly voiced concern. “We can’t put business owners in a position where they must sell assets just to pay a tax bill,” Ferracci warned, adding that no final decision has been made.
The debate has revealed stark divisions inside the centrist government, with some MPs wary of alienating business leaders and high-income professionals amid already sluggish economic growth.
Wealthy Retirees May Also Face Higher Taxes
In a parallel discussion, French ministers are also weighing tax hikes targeting affluent pensioners as part of broader cost-saving measures for the 2026 budget. Facing a massive €40 billion deficit, officials are now re-evaluating several long-standing tax advantages granted to retirees — including the 10% tax allowance, which alone costs the state nearly €5 billion annually.
Employment Minister Astrid Panosyan-Bouvet said that “all options are on the table,” including changes to pension indexation — a highly sensitive issue after similar proposals in 2025 were shelved following public backlash.
“We need to stop treating retirees as a single, vulnerable group,” said Panosyan-Bouvet on a podcast with BFMTV. “Many own their homes or even second homes. The strain isn’t universal.”
While Prime Minister François Bayrou has stated he’s against raising taxes, insiders suggest the government may pursue these pension-related reforms more subtly, especially if they can be framed as closing loopholes rather than increasing taxes.
Economists and Business Leaders Back the Move
Despite political friction, support for the measures is growing in economic circles. Think tank Institut Sapiens estimates France spends up to €89 billion per year on pension-related tax breaks and benefits.
“Retirees today receive double the benefits compared to their contributions,” said economist Erwann Tison, who argued that working-age citizens now bear a disproportionate tax burden.
Former Airbus CEO Louis Gallois echoed this sentiment, calling the tax code overly generous toward high-income retirees. “We need fairness in the system,” he said in an interview with LCI, while also advocating for partial de-indexation of pension increases for those earning over €4,000 per month.
Political Fallout Looms Ahead of 2026
The government’s balancing act is risky. With both far-left and far-right parties opposing changes to retiree tax benefits, Bayrou risks uniting his opposition in the Assemblée Nationale — a move that could threaten his leadership, especially as memories of former PM Michel Barnier’s resignation over similar proposals still linger.
With debates intensifying and the 2026 budget under scrutiny, the direction France takes on tax reform will have lasting implications for its economy, retirees, and investors.