2024-09-20 14:03:31
Prime Minister Michel Barnier assesses the country’s budgetary situation “very serious”and did not rule out the possibility of increasing taxes. A taboo for Macronists, while Emmanuel Macron’s two five-year terms were marked by tax reductions or eliminations. The resigning finance minister, Bruno Le Maire, also claimed, in his farewell speech at Bercy, to have achieved “55 billion euros in tax cuts.” In a report published in Julythe Court of Auditors estimates that tax cuts since 2018 have contributed to the deterioration the public deficit: “The impact is estimated at 62 billion euros in 2023.”
In detail, tax reductions or eliminations have rather benefited the wealthiest or businesses, and the majority of households have had to make do with a few measures in favour of purchasing power.
Transformation of the solidarity tax on wealth into a tax on real estate wealth
Since when? Emmanuel Macron’s campaign promise, the abolition of the wealth solidarity tax (ISF), replaced by the real estate wealth tax (IFI), was implemented in 2018.
Who is concerned? The IFI concerns tax households holding real estate assets whose net value (the difference between the value of the assets and any loans) is greater than 1.3 million euros on 1is January of the tax year. This measure benefits the wealthiest because it excludes securities and investments from the tax calculation. The aim of the reform was to support private investment and the growth of the French economy.
What is the loss of earnings? And France Strategy report 2023 believes that, if the ISF had been maintained, its revenues “in 2022 would have been equal to 6.3 billion euros.” The IFI having brought in 1.83 billion that year, “the loss of revenue related [au] replacement [de l’ISF] by the IFI would therefore have amounted to 4.5 billion euros », according to France Stratégie.
Transformation of capital income taxation into a “flat tax”
Since when? In addition to the abolition of the ISF, the 2018 finance law introduced a single flat-rate levy (PFU) of 30%, known as the “flat tax”. “, for savings income: income from movable capital, dividends, property income, etc.
Who is concerned? The aim is to simplify and reduce the taxation of savings in order to make the tax system more attractive, particularly for the wealthiest. The PFU replaces the taxation of capital income at the income tax scale. The previous system, sometimes perceived as complex and dissuasive, led to progressive taxation, which could reach 60% for the wealthiest taxpayers, compared to 30% regardless of the amount declared with the introduction of the “flat tax”.
What is the loss of earnings? The implementation of the PFU in 2018 represents a cost of 1.8 billion euros for the State, according to the economic, social and financial report annexed to the draft finance bill for 2022.
Reduction in the corporate tax rate
Since when? The 2018 Finance Act also provided for a gradual reduction in the corporate tax rate, from 33.3% in 2017 to 25% in 2022. All while maintaining the reduced rate of 15% for small and medium-sized enterprises (SMEs).
The World
Support an editorial team of 550 journalists
Access all our content unlimited from €7.99/month for 1 year.
Subscribe
Who is concerned? Corporate income tax (IS), also known as the “corporate profits tax”, is levied on the results of French companies. The reform was aimed at supporting private investment and economic growth.
What is the loss of earnings? The preliminary assessment of the finance law concerning the reduction in the IS rate assumed a budgetary cost of 11.1 billion eurosThe poor economic performance of taxed companies and the drop in the tax rate have also had repercussions on tax revenues: from 71 billion euros in 2021, they fell to 68 billion in 2022, a decrease of 4% according to figures from the Department of Fiscal Studies and Statistics.
Reform of the “exit tax”
Since when? In 2018, the “exit tax” was not abolished, as Emmanuel Macron had initially announced, but revised in the form of a more targeted mechanism so as not to discourage investors.
Who is concerned? « The “exit tax” is a measure aimed at business leaders tempted by tax exile. Established in 2011, under the presidency of Nicolas Sarkozy, its objective is to combat tax evasion by taxing at 30% the theoretical or latent capital gains made by French people who own shares in companies (stocks, bonds, etc.) at the time they move their tax residence out of the country. If they sell their shares within fifteen years of leaving the country, they will be taxed. The 1is January 2019, the finance law reduced to two years the period of holding shares after departure (from which there is exemption from the “exit tax”).
What is the shortfall? Between 2012 and 2017, it brought in 138 million euros to the State, and concerned less than 400 people per year on average, according to Bercy. While it is difficult to know the revenues of the “exit tax”, we can consider that the reduction of the deadline implies a reduction in the yields of this tax for the State. In 2022, the National Assembly voted to reinstate the “exit tax” in its initial version., thus reducing the period to fifteen years, against the advice of the government. According to Montaigne Institutea liberal think tank, this recovery could bring in up to 67 million euros per year.
Elimination of housing tax for main residences
Since when? The abolition of this tax for the main residence was initiated by the 2018 finance law, initially for the most modest households, before being gradually generalized to all households on 1is January 2023.
Who is concerned? The housing tax applied to each tax household with real estate, whether tenant or owner. Eliminated on main residences, this tax is nevertheless maintained for secondary residences for owners or usufructuaries of furnished premises and their outbuildings. This was one of the commitments of the President of the Republic in favor of household purchasing power through a reduction in compulsory deductions.
What is the shortfall? On the local authorities side, the housing tax represented 23.4 billion in revenue in 2016. But the State has undertaken to compensate for the loss. The abolition is generally offset by an allocation of revenue from the value added tax (VAT) to local authorities. The continuation of the reform of the housing tax has therefore further affected the State budget through revenue losses of 2.8 billion euros in 2023, according to the Court of Auditors report of April 2024.
Elimination of the contribution to public broadcasting
Since when? The abolition of the housing tax brought with it the end of the contribution to public broadcasting (CAP) in 2022. In fact, the collection of the CAP was linked to the housing tax.
Who is concerned? The CAP, formerly called the audiovisual license fee, is a tax linked to the ownership of a television set. It financed public audiovisual services, such as France Télévisions or Radio France. This abolition was also part of the measures in favor of household purchasing power.
What is the shortfall? According to the report co-written by the General Inspectorate of Finance and the General Inspectorate of Cultural Affairsthe CAP represented 89% of the funding of public broadcasting, and had reported 3.1 billion euros in 2020.
Abolished since 2022, it was to be followed by a reform of the financing of public broadcasting that has still not been voted on. The temporary solution found by the government to compensate for the loss is the allocation of a fraction of VAT until the end of 2024. And after? For the moment, the debate on the reform project has been postponed.
Elimination of the contribution on the added value of companies
Since when? The rate of this tax has already been halved in 2023 and should gradually decrease (by a quarter each year) until 2027, when it will be completely eliminated.
Who is concerned? Based on the added value produced during the reference period, the contribution on the added value of companies (CVAE) must be paid by companies that generate a certain amount of turnover and whose activity is taxable under the business property tax. The aim of its abolition is to continue the reduction of production taxes.
What is the loss of earnings? The CVAE brought in 9.6 billion euros to local authorities in 2021, and 9.3 billion in 2022, the last year at full rate, compared to 15 billion in 2020.
Since the 1is January 2023, the product of the CVAE is collected by the State and no longer by local authorities. To compensate for the loss of this transfer, a fraction of the VAT is again mobilized. Thus, the loss is approximately 5 billion euros for the State in 2023 (year in which the rate had already been reduced by half), according to the revenue assessment for 2024.
1726886410
#taxes #eliminated #reduced #Macron #presidency
