France's Tax Shock: Unveiling the True Fiscal Impact

France's latest fiscal budget, unveiled by Prime Minister Michel Barnier, poses a greater tax increase than initially disclosed, causing concern over President Macron's pro-business legacy. While the government claims tax hikes will mainly impact large corporations, new details reveal a more widespread effect on smaller businesses and individuals.

France's new budget, presented by Prime Minister Michel Barnier, has stirred controversy by imposing a more substantial tax burden than initially disclosed. While the government claims the increases, totalling 29.5 billion euros, will largely affect major corporations and wealthy individuals, critics argue smaller businesses will also be heavily impacted.

According to Allianz Trade economist Maxime Darmet, the discrepancy lies in the government's classification of some measures as spending cuts while others are termed tax hikes. A pivotal issue is the planned reduction in payroll tax breaks for low-income workers, which is simultaneously categorized as both a spending cut and a tax hike.

Amid fractured political responses in Parliament, there is mounting concern that these fiscal policies could undermine President Macron's pro-business reforms. The spending cuts, initially pitched as 60 billion euros by the government, are now seen as window dressing, with true figures pointing to a greater reliance on tax hikes.

(With inputs from agencies.)