The French government's draft budget for 2026 provides for the abolition of pension indexation, as well as cuts in the public sector and an increase in the tax burden, reports Agence France-Presse.
According to the agency, in addition to freezing pensions at their current level, the government plans to eliminate a 10% tax break for pensioners next year, replacing it with a fixed amount of EUR 2,000 per person. At the same time, the authorities intend to freeze all social benefits, including family benefits, at the 2025 level. The budget also plans to increase health insurance spending by 1.6% to 270.4 billion euros, which is “significantly less than the natural growth of spending“ and will thus save 7.1 billion euros in healthcare.
As for the tax burden, the government intends to extend by one year the differentiated tax on the highest incomes, which was introduced as a temporary measure and applies to households with incomes above 250,000 euros for singles and 500,000 euros for couples. The rate will be 20%, which should generate 6.5 billion euros in revenue for the treasury. The government plans to freeze the income tax rate, which it hopes will generate 1.9 billion euros for the budget. Among the new provisions are a tax on holding companies, designed to "cure tax avoidance strategies by accumulating undistributed profits within companies that are thus exempt from tax", and a tax on small parcels from countries outside Europe.
To maintain the promised course of reducing the budget deficit to 4.7%, the government intends to cut more than 3,000 positions in various state agencies and structures. At the same time, the government intends to maintain its commitment to increase defense spending by 6.7 billion euros compared to the current year.
Earlier, the international rating agency Fitch Ratings downgraded France's long-term foreign currency default rating (IDR) from AA- to A+ with a stable outlook. The new rating is the worst in France's history. The country's public debt now exceeds 3.4 trillion euros and continues to grow.
Source: tass.ru