The government repeats it over and over again, its social and fiscal measures have made it possible to increase the disposable income of households. In 2020/2021, before the rise in inflation but after the health crisis, the executive has implemented several sets of measures in tax matters and social benefits.
The most emblematic are the reduction of personal income tax with the reduction of the type of the first tranche and the progressive suppression of the tax on housing. We can also cite the revaluation of certain social benefits, and specific and exceptional measures such as solidarity aid, the increase in school aid, the 100-euro energy check and the 100-euro inflation bonus.
But which households benefited the most? Have the poorest households really seen their disposable income increase in the face of a situation without its implementation? INSEE analyzed the issue in its latest Social Portrait of France.
In total, a profit of 280 euros per year and per person
“Once fully implemented, these new social and fiscal measures increase the standard of living of people residing in metropolitan France by 1.1%,” the authors write.
Specifically, the total profit reaches 12,700 million euros in 2021, or 280 euros on average per person.
INSEE shows that half of the richest households benefited more from these measures than the poorest half, with an average profit of 420 euros for the former compared to 130 euros for the latter.
Why this disparity? The answer is quite simple: 90% of the 12.7 billion additional disposable income generated is related to the reduction in income tax. However, the most modest households are not subject to tax.
Lower income tax benefits the rich
“These measures, mainly linked to direct debits, benefit the richest 50% more sharply: 400 euros on average per person,” it can be read. “The reform mainly favors people above the average standard of living, the average profit increases up to the 8th decile”.
The same observation for the phasing out of the housing tax that “benefits households with an intermediate standard of living in 2020 and wealthy households in 2021.”
In 2020, this represents an increase in disposable income of 3.5 billion euros for 17.2 million households, that is, an annual gain in disposable income of 200 euros on average per affected household. The 2021 component represents a gain of 2.2 billion euros and affects 6.2 million households, beneficiaries of 360 euros on average during the year.
Bonuses and aid have relieved the poorest 20%
On the contrary, the exceptional payments intended to alleviate the effects of the health crisis in 2020 and the rise in energy prices in 2021 are the main factor in raising the standard of living of the poorest 20%. But only 220 euros on average.
Specifically, in 2020, the payment of the Exceptional Solidarity Aid (AES) and the 100-euro increase in the School Aid (ARS) raise the standard of living by 150 euros.
In 2021, the energy check, aimed at the poorest 20% of the population, will increase the annual standard of living by 40 euros on average. The exceptional aid of 100 euros, known as “inflation compensation”, increases disposable income by 1,200 million euros, that is, an average improvement in the standard of living for the total population is 30 euros.
Neutral effect on the poverty rate
“The exceptional aid for 2021 is not enough to compensate for the mechanical drop in disposable income, induced by the non-renewal of the exceptional aid for 2020,” underlines the statistician.
More generally, “if the 2020 measures increase the standard of living for all, those of 2021 will mainly benefit the richest 20%,” says INSEE.
Taken together, the 2020 and 2021 measures have an almost neutral effect on the poverty rate (+0.1 point). But without these measures, the poverty rate would have increased in France by 0.3 points, calculates INSEE.
Source: BFM TV
