France Proposes Revoking Pensioners' Tax Reduction Amid Budget Overhaul

The French government considers removing a 10% tax reduction for pensioners to save €40 billion as part of the 2026 budget plan. This proposal is part of broader efforts to reduce the national budget deficit. The potential removal has sparked debate among government officials and pensioner unions.

The French government has announced plans to possibly remove a 10% tax reduction for pensioners as it seeks €40 billion in savings for the 2026 budget. According to Amelie de Montchalin, the Minister for Public Accounts, the move aligns with broader efforts to cut the national budget deficit, which stood at 5.8% of GDP in 2024.

This tax reduction, initiated in 1978, was meant to equalize the benefits received by those still in the workforce. However, ongoing consultations have sparked a debate on its current relevance, revealing differing opinions. Gilbert Cette, President of the French Pensions Advisory Council, and Patrick Martin, President of Medef, have both supported the proposal, arguing that it is 'illogical' and 'absurd' to grant this deduction to retirees.

Conversely, French pensioner unions have opposed the proposed removal, arguing that it would unnecessarily increase the tax burden on approximately 8.4 million retirees. The unions stressed that not all pensioners benefiting from this tax reduction are financially comfortable, potentially leading to wide-reaching financial implications. The looming decision continues to stir discussions across the nation.

(With inputs from agencies.)