France plans to raise taxes on big companies

France’s new Prime Minister Michel Barnier is considering a temporary increase in corporate tax on the country’s largest companies, as well as a tax on share buybacks, as part of efforts to plug a major hole in public finances, Le Monde reported Sunday.

Barnier, who took office earlier this month, already finds himself facing a growing budget crisis, with tax revenues weaker than expected and spending higher than planned.

France’s credibility with financial markets, where its borrowing costs have risen, and its European Union partners is at stake.

Le Monde says the 2025 budget could include an 8.5 percentage point increase in the tax on companies with annual sales of at least 1 billion euros ($1.1 billion). The tax would be temporary and could generate 8 billion euros in 2025.

Other possible measures include a tax on share buybacks.

The new government lacks a parliamentary majority, and passing the budget will be difficult, with even the parties in government disagreeing on whether tax increases are an option.

The previous government had planned to cut the fiscal deficit to 3% of GDP by 2027, but weak tax revenues and budget overruns have made that goal unattainable. Barnier needs to finish the 2025 budget draft within days and deliver it to lawmakers by mid-October at the latest.