Paris, October 28, 2025 – As France grapples with a persistent budget deficit projected at 5.4% of GDP this year, the National Assembly has plunged into a high-stakes debate over the revenue section of the 2026 budget bill. The discussions, which began on October 24, have exposed deep fissures in the country's fractured parliament, where Prime Minister Sébastien Lecornu's minority government relies on precarious alliances to pass legislation. At the center of the turmoil is a renewed push by the Socialist Party (PS) for "tax justice," particularly the reinstatement of a wealth tax targeting the ultra-rich. Failure to deliver concessions, PS leaders warn, could trigger a no-confidence motion that topples the administration by week's end.
Olivier Faure, the first secretary of the Socialist Party, issued a stark ultimatum during an interview on French broadcaster LCI over the weekend. "By the end of next week, we’ll know whether we’re heading toward dissolution or not," Faure declared, referring to the potential for early legislative elections if the government collapses. He emphasized that the PS expects tangible progress on tax reforms as lawmakers scrutinize the budget's revenue provisions, which aim to raise over €30 billion ($35 billion) through a mix of tax hikes and spending cuts to bring the deficit down to 4.7% of GDP in 2026. "The rejection of a wealth tax or a modified version of it would constitute a 'casus belli' – a cause for war," Faure added, invoking the Latin term to underscore the gravity of the standoff. This rhetoric builds on the party's recent survival of a no-confidence vote on October 16, where seven PS-affiliated lawmakers defected in protest, highlighting internal tensions over concessions like the suspension of Macron's unpopular pension reform.
The Socialist demands center on the so-called Zucman tax, a proposal inspired by French economist Gabriel Zucman to impose a 2% minimum levy on net wealth exceeding €100 million ($116.5 million). Affecting roughly 1,800 households – or just 0.01% of taxpayers – the measure is projected to generate €15-20 billion annually, providing a lifeline for strained public services without broadly impacting the middle class. Zucman, a rising star in global economic circles and a professor at the Paris School of Economics, has argued that France's ultra-wealthy currently pay effective tax rates half those of average citizens due to loopholes in income and asset taxation. "Billionaires pay virtually no income tax in France," he told Reuters in September, noting that their fortunes have ballooned over the past 15 years while evading progressive levies.
However, the original Zucman tax faced a setback last week when the Assembly's Finance Committee rejected it, citing concerns over taxing professional assets and potential capital flight. In response, the Socialists pivoted to a "lighter" version via an amendment tabled on October 24: a 3% minimum tax on assets over €10 million, excluding "innovative" startups and family-owned businesses to assuage right-wing critics. This compromise, dubbed "Zucman light," is estimated to yield €5-7 billion – a fraction of the original but still a step toward equity, according to PS calculations. The amendment's debate, initially slated for Saturday, has been delayed until later this week, buying time for negotiations but heightening tensions.
Even this diluted proposal has drawn fire from its namesake. In a Monday interview on BFM TV, Zucman dismissed the exemptions as "irrelevant," warning they would open doors to fiscal optimization schemes reminiscent of the old Impôt de Solidarité sur la Fortune (ISF), abolished in 2018. "Exempting startups and family businesses... no professional assets should evade the tax," he insisted, arguing that such carve-outs invite the wealthy to restructure holdings to minimize liability. Zucman, who reiterated his stance on France 2 the same day, emphasized that empirical studies show minimal fiscal exile from wealth taxes – a direct rebuke to President Emmanuel Macron's May claim that the rich would flee France. Polls underscore public appetite: An Ifop survey for the PS found 86% support for the tax, including 92% among Macron's own voters.
Echoing Faure's warnings, PS parliamentary leader Boris Vallaud amplified the pressure in a Monday RTL interview. "Go explain to the French that because we didn’t want to – or weren’t able to – ensure more tax justice, medical deductibles will increase, housing benefits will be frozen, the minimum income support will be frozen, and disability benefits will be frozen," Vallaud said, linking the absence of wealth taxation to austerity measures hitting vulnerable groups. He rejected any "deal" with Lecornu, insisting, "Without a credible Zucman tax or serious contribution from high fortunes and multinationals, everything will collapse." Vallaud's comments align with the PS's broader critique: The government's €30 billion savings plan disproportionately burdens retirees, youth, and families while sparing billionaires and corporations.
Lecornu's response has been measured but firm. In his October 24 opening speech to the Assembly, the prime minister – reappointed just weeks after a brief resignation amid coalition talks – vowed "compromises without compromissions." He opposes the Zucman tax outright, favoring targeted levies on wealth management holdings over €5 million instead, to avoid deterring investment in key sectors like AI and green tech. Government spokesperson Maud Bregeon echoed this on BFM TV Tuesday, stating, "You can call it Zucman or Zucman light – we’ll be against it" to protect jobs and innovation. Yet, concessions have emerged: On Monday, the Assembly approved a government amendment hiking the surtax on large corporations by €2 billion, a nod to left-wing demands that boosts the budget's yield to €6 billion from corporate profits. The budget also suspends the 2023 pension reform – raising the retirement age to 64 – until after 2027 elections, costing €400 million in 2026 but securing initial PS backing.
The right has notched its own victories amid the chaos. Laurent Wauquiez, leader of the conservative Les Républicains (LR), celebrated on X (formerly Twitter) the adoption of an LR amendment granting full tax exemption for tips in the hotel and restaurant sectors. "Third victory: thanks to our amendment, the total tax exemption of tips for employees... has been adopted, despite opposition from the left," Wauquiez posted, framing it as relief for low-wage workers in a sector employing over 1.3 million French. The measure extends a temporary exemption set to expire December 31, 2025, potentially adding €500 million in disposable income for servers and hospitality staff. Wauquiez, speaking on RTL Tuesday, reiterated LR's anti-tax stance: "We are against all tax increases," proposing instead spending cuts and a capped social contribution at 70% of the minimum wage to curb "assistanat" (welfare dependency).
This patchwork of amendments – over 1,500 tabled so far – has already inflated the deficit by €9 billion in committee votes, blending left-right pacts with far-right abstentions. The independent High Council of Public Finances warned Tuesday that the plan rests on "optimistic" growth forecasts (1.2% GDP rise) and risks under-delivery if political instability persists. Far-left La France Insoumise (LFI) accuses the PS of a "jeu de dupes" (game of fools) for softening on Zucman, while the far-right Rassemblement National (RN) eyes opportunistic alliances.
As debates shift to the Social Security budget in committee this week, the clock ticks. Constitutionally, the full bill must pass by December 20, but missing the October 13 tabling deadline could invoke emergency extensions – a repeat of last year's post-Barnier chaos. For Lecornu, a former defense minister thrust into this fiscal quagmire after Macron's June 2024 snap elections fragmented the Assembly, the stakes are existential. A no-confidence vote requires 289 of 577 signatures; with PS abstentions, it could succeed by Friday. Faure hinted at November elections if dissolution follows, potentially reshaping Macron's lame-duck presidency.
Economists like Zucman frame this as more than partisan brinkmanship: a litmus test for addressing inequality in a nation where the top 1% hold 25% of wealth, per World Inequality Database figures. Critics, including Bpifrance CEO Nicolas Dufourcq, decry the tax as a "nail in the coffin" for innovation, potentially chasing firms like Mistral AI abroad. Yet public frustration simmers – strikes over frozen benefits loom, and approval for Macron's handling of the economy hovers at 28% in recent polls.
In the marbled halls of the Palais Bourbon, where guillotine-era ghosts whisper of fiscal revolts, Lecornu's government teeters. Will a Zucman compromise emerge, or will "casus belli" ignite France's latest political inferno? By November 1, the Assembly's vote on the wealth tax amendment will decide – and perhaps redraw the nation's fiscal map.
