French lawmakers adopt tax hikes on global firms amid volatile budget talks

PARIS (Reuters) -French lawmakers approved two surprise tax hikes on multinational companies late on Tuesday, defying Prime Minister Sebastien Lecornu's government and injecting fresh uncertainty into negotiations over next year's budget bill.

The amendments, which were both passed during the bill's first reading in the lower house with support from the far-right and hard-left, can still be struck down later on in the legislative process.

They include a new levy based on global revenues and double an existing digital tax. Finance Minister Roland Lescure said the measures could breach international tax treaties and damage France's reputation as a destination for foreign investment.

The votes showed how unpredictable the budget process has become in France's deeply fragmented parliament.

Lecornu does not have a majority and is reliant on support from Socialist lawmakers if he wants a budget to be passed and the government to survive.

Lecornu said earlier this month he would not use special constitutional powers in order to push the bill through and avoid losing a vote of no confidence.

UNPREDICTABLE ALLIANCES IN PARLIAMENT

That promise has opened the door to unpredictable alliances in parliament, which is split into three ideologically-opposed blocs -- the left, the centre-right and the far-right -- since last year's snap elections.

Marine Le Pen's far-right party joined the hard-left France Unbowed on Tuesday to pass a tax targeting multinationals based on their global turnover generated in France.

The measure would ensure profits linked to French activity are taxed at a minimum rate of 25%, even if declared in low-tax jurisdictions.

Lawmakers also voted to raise the digital tax on tech giants with global sales of over 2 billion euros ($2.33 billion) to 6% from 3%, against government advice.

The move risks reigniting tensions with Washington, where U.S. President Donald Trump has threatened tariffs over similar taxes targeting U.S. firms.

The measures are likely to be struck down when the budget bill moves to the conservative-controlled Senate in coming weeks. They could also be declared null by the country's constitutional court, which has in the past ruled against "confiscatory" taxes.

Lawmakers are expected to discuss the introduction of wealth taxes later this week or next. Le Pen ruled out approving the so-called "Zucman tax", which means it is very unlikely to be adopted.

In parliament, Socialist lawmakers, who had previously conditioned their tacit support to Lecornu on approval of a wealth tax, said they were now focusing on "high-yielding" taxes that spare workers, leaving the door open for a compromise.

($1 = 0.8575 euros)

(Reporting by Michel RoseEditing by Frances Kerry)