An additional tax introduced by the French government targeting high earners and the wealthy brought in only a quarter of the revenue initially expected. As the government's plan to boost revenue to reduce the fiscal deficit diverges from reality, the burden of fiscal management is growing for the minority government led by President Emmanuel Macron.
On the 22nd (local time), the Financial Times (FT) of the United Kingdom reported, citing the French Finance Ministry, that the so-called "differentiated contribution," applied to high earners with annual income of €250,000 (about 360 million won) or more, yielded only €400 million (about 580 billion won) in revenue in the 2025 fiscal year. The French government had initially expected €1.9 billion (about 2.8 trillion won). The tax was a special income tax measure designed so that high earners would pay at least 20% of their minimum income in taxes.
The French government expects €650 million (about 940 billion won) in revenue from this tax this year, but that too is about €1 billion (about 1.45 trillion won) less than the original plan. Accordingly, the French government said it would offset the fiscal deficit by combining other tax increases with expenditure cuts.
The French Finance Ministry pointed to changes in the system's design and delays in its implementation as the reasons for the revenue shortfall. The tax was originally to be applied retroactively to 2024 income, but as political gridlock delayed passage of the budget, it only took effect from 2025. As a result, retroactive taxation became impossible, and high earners were able to reduce their tax burden by bringing forward dividend payments to the end of 2024, the ministry said.
The outcome is reigniting debate in French politics over how to resolve the fiscal deficit. Last year, France's fiscal deficit reached 5.4% of gross domestic product (GDP). To reduce it, the Macron government strengthened taxes on high earners and also raised taxes on large corporations. The tax hike on large corporations, introduced as a one-year temporary measure, was later extended, drawing pushback from the business community and lobbying groups.
The left has argued for a stronger wealth tax. Last year, left-wing parties pushed the so-called "Zucman tax," named after French economist Gabriel Zucman, but it failed to pass the legislature. The Zucman tax would have imposed an annual minimum 2% tax on all asset, including corporate equity and unrealized gains, held by ultra-wealthy individuals with more than €100 million (about 145 billion won) in asset.
By contrast, the minority government led by Macron's centrist prime ministers opted for a more moderate approach. But as revenue fell far short of expectations, criticism is growing that the government's gradual approach lacks effectiveness. Éric Coquerel, the far-left chair of the National Assembly's Finance Committee, labeled the outcome a government failure, saying, "If we stop at merely formal measures to prevent tax evasion by the ultra-wealthy, a fundamental solution will be difficult."
The French daily Le Monde said, "The weak revenue shows the structural limits of taxing the wealthy." The point is that the wealthy often "optimize" or avoid their tax burden in various ways, such as asset transfer or the use of holding companies. In fact, in the 1980s, about half of the member countries of the Organization for Economic Cooperation and Development (OECD) levied wealth taxes, but now only a few countries maintain them, and their contribution to revenue remains limited.