French Parliament's Finance Committee Rejects 2026 Budget's Revenue Section Amid Political Turmoil
The French finance committee has broadly rejected the 2026 budget's revenue section, triggering political tensions including suspensions within Les Républicains amid critiques of government policies.
- • Finance committee rejected the 2026 budget's revenue section by 37 to 11 votes.
- • The left, National Rally, and Les Républicains opposed the budget, with Modem, Horizons, and Liot abstaining.
- • Budget amendments include a €7 billion tax pressure reduction and new 'Gafam' tax on American tech profits.
- • Six LR ministers participating in the government were suspended amid party disagreements over policy direction.
Key details
In a decisive vote overnight, the French National Assembly's finance committee rejected the revenue section of the 2026 state budget by 37 votes to 11. This development signals significant challenges for the government as it prepares for broader parliamentary debates starting this Friday. The rejection came from the entire left, the National Rally, and members of Les Républicains (LR), including several government ministers.
The proposed budget sought to reduce tax pressure by €7 billion compared to the government's original draft, which demanded equivalent expenditure cuts to target a 4.7% deficit. However, the finance committee removed key articles related to state transfers to local governments, reflecting dissatisfaction with the budget's balance. The Socialist Party expressed particular concern, with PS budget leader Philippe Brun calling the budget "unbalanced" for middle and lower-income groups. LR's general rapporteur Philippe Juvin emphasized the need for substantial revisions, describing the budget as "not credible" in its current form.
Attempts by the left to reinstate taxes targeting the ultra-rich and estate taxes were unsuccessful, though they welcomed the repeal of taxation on daily allowances for long-term illnesses. Deputies also maintained income tax freeze adjustments excluding the lowest earners and opposed removing a 10% tax allowance for retirees. Notably, the committee approved a new tax targeting profits of large American tech firms ("Gafam" tax), expected to yield significant revenue.
Tensions mounted around social housing tax exemptions and other amendments. The committee is set to next review the social security budget, including plans for suspending the pension reform for 2026 and 2027, with a focus on financing from supplemental health insurance and retirees, as pushed by the Socialists.
In the political fallout, Les Républicains suspended six government ministers aligned with Lecornu II, aiming to reaffirm party authority under president Bruno Retailleau. The suspension, decided in a two-hour party meeting, reflected criticism of the government's leftward policy shift, abandonment of pension reforms, and increased taxation. The party warned that remaining in the government would compromise LR's independence and principles.
This multifaceted rejection and ensuing political disciplinary actions highlight the contentious atmosphere shaping France's budgetary and governmental landscape going into the critical debates this week.