France 2027 budget: Government denies direct tax hikes

French Prime Minister Sébastien Lecornu has denied rumors of direct tax increases for the 2027 budget, specifically refuting claims regarding income tax hikes, freezes on social benefits, or the removal of student housing aid. However, discussions regarding methods to increase fiscal pressure without official tax rate changes are ongoing.

Potential strategies under consideration include the non-indexation of income tax brackets against inflation. This mechanism, often called “cold progression,” could push taxpayers into higher brackets as nominal wages rise without a formal change in law. Additionally, the government may explore targeted measures, such as reducing the revaluation of pensions for higher earners to below inflation levels to control public spending.

These fiscal considerations come as France faces a significant public debt burden, projected to reach €3.1 trillion by 2026. While the government seeks to manage this debt, political opposition, including Jean-Luc Mélenchon, has signaled intentions to challenge the budget in parliament.