French National Assembly committee alters 2027 budget and rejects 1.4 billion euro pension tax cut

Parliamentary committee opens budget review

The National Assembly Finance Committee began examining the 2027 state budget on Wednesday, reviewing the revenue portion of the draft legislation. The text, formally presented by the government on 1 October, targets a reduction in France's public deficit to 5% of gross domestic product in 2027. Prime Minister Sébastien Lecornu reiterated that fiscal objective during an address delivered from the Matignon residence on Wednesday evening. Deputies tabled nearly 1,800 amendments for the committee stage, which functions as a preparatory session before debates move to the plenary assembly. On 13 October, the full hemicycle will reset the discussion and open floor debates from the government's initial draft.

Defeat on the retiree tax allowance

Lawmakers swiftly rejected one of the government's central revenue measures aimed at curtailing tax relief for pensioners. The government had proposed reducing the ceiling on the 10% income tax deduction for retirees from 4,439 euros to 3,000 euros, an adjustment projected to yield 1.4 billion euros in state revenue. The proposal was designed to combine with a desynchronisation of specific pensions from inflation within the Social Security budget to ensure retirees contributed to fiscal consolidation. An alignment of deputies from La France Insoumise, the Rassemblement National, and factions of the governing bloc voted to eliminate the provision entirely. Opponents argued that the reduction unfairly penalised modest retirees, prompting Communist deputy Nicolas Sansu to criticise the impact on low-income households.

A household with two people who each earn 1,250 euros per month will be hit by this tax increase.

MoDem parliamentary group leader Marc Fesneau responded to the committee vote by defending the need to distribute fiscal consolidation efforts.

The restoration of accounts cannot rely solely on those who work.

Fiscal rewrites and wealth tax debates

Beyond the retiree tax deduction, the committee reshaped multiple fiscal articles during its first two days of work. Deputies voted to scale back the tax credit for personal services and approved extensive changes to the government's planned reform of capital contribution transfers. In contrast, lawmakers endorsed an initiative announced by Lecornu to raise the tax-free limit on family financial gifts from 31,865 euros to 50,000 euros, extending its duration. Left-wing lawmakers coordinated efforts to push alternatives targeting high earners, including revisions of the wealth tax and the Zucman tax. The Zucman proposal sought to establish a minimum floor tax on households with wealth exceeding 100 million euros to counter tax avoidance. Those progressive wealth tax initiatives failed to secure a majority in the committee, though left-wing deputies joined the government on Thursday to preserve a targeted provision addressing the wealthiest taxpayers.

Spending additions and civil service adjustments

The modifications approved by the committee added close to 4 billion euros in public spending in under 48 hours, according to Minister of Public Accounts David Amiel. Committee discussions are scheduled to continue through at least Friday evening as parliamentarians review remaining amendments. Alongside parliamentary amendments, the executive branch outlined plans within the 2027 bill to curtail operating costs across government departments. Sébastien Lecornu's team examined potential salary reductions for ministers and ministerial advisers in early September, while the draft text includes spending reductions for Matignon services. The finance ministry also planned to moderate civil service staff cuts across its departments in 2027, tempering previous reduction rates without halting post eliminations.