Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The French parliament has voted against a Socialist demand for a controversial tax on the ultra rich, further complicating the government’s efforts to pass a budget for 2026 and survive no confidence votes.
A majority of National Assembly lawmakers on Friday voted against the proposed 2 per cent tax on fortunes over €100mn, a measure pushed by economist Gabriel Zucman and which would have hit shareholdings and unrealised gains. But MPs did ratchet up other levies on companies as the government tries to strike a budget deal and reduce a public deficit.
The Zucman tax — or a compromise version of a steeper 3 per cent levy on a broader base targeting wealth over €10mn — was a key Socialist demand to back Prime Minister Sébastien Lecornu and his budget plans. Both tax versions were struck down on Friday.
Lecornu, a close ally of President Emmanuel Macron, was against the levies, arguing they would kill investment in France. He had previously suggested other ways to achieve “social justice” were being explored to keep the Socialists onside.
The Socialist party has become kingmaker in the country’s fractured parliament following more than a year of government instability after Macron called and lost snap elections last summer. It abstained in two no-confidence votes against Lecornu’s government earlier this month, allowing it to survive.
While the party has signalled it could live with more modest tax proposals, it has insisted on additional levies on businesses to raise roughly €10bn in order to plug a gaping deficit that the government seeks to keep below 5 per cent of GDP.
It was not yet clear on Friday if the measures that were adopted — including a 2 per cent tax on holding companies that are not used for business purposes — would be enough to secure the Socialists’ support.
Socialist party leader Olivier Faure said on X that he “had made no progress or reached any conclusion” after meeting the premier on Friday.
Lecornu’s government had already made concessions to the Socialists, including by putting on hold an unpopular raise in the retirement age to 64 — a cornerstone Macron policy — until after the next presidential elections in 2027.
France’s previous government collapsed on attempts to push through a deficit-cutting budget as debt climbs steadily. Lecornu’s €30bn package of tax rises and spending cuts is less ambitious than the one put forward by his predecessor François Bayrou — but not easier to pass.
As of this week, there were some 2,500 amendments pending on the 2026 budget, with lawmakers voting on them in a marathon session on Friday.
After a series of raucous parliamentary debates, proposals and counterproposals this week, other tax-rising measures have gone through with support from the far-left and Marine Le Pen’s far-right party.
They include a 33 per cent tax on share buybacks and another measure that widens the scope of multinational companies that would have to pay a minimum 15 per cent tax.
“Tax justice has given way to tax escalation,” economy minister Roland Lescure warned.
