New tax cuts soon? In his strategy to recover public opinion after the pension sequence, Emmanuel Macron promises to ease the tax burden on the middle classes. “We still need to restore credibility to work”: this is how the Head of State justified his plan for a new tax cut in the newspaper columns Opinion.
In short, we follow the same logic of the pension reform: to make the overall amount of work advance in the country. And after the “stick” (the postponement of the age of majority), here is the “carrot”: tax cuts for the middle classes.
Already an objective reduction in taxes
Because to use the words of Emmanuel Macron “taxes crush purchasing power gains between 1,500 and 2,500 euros. I’m talking about those who are too rich to be helped and not rich enough to live well.”
The head of state, however, assures that taxes have already dropped 52,000 million euros compared to the previous five-year period. If the calculation method to obtain this result is criticized, taxation has objectively decreased with the drop to 11% (instead of 14%) of the 2nd tranche of personal income tax (5,400 million euros), the suppression of the tax on housing ( 15,000 million euros), the television license fee or even the tax exemption for overtime.
Inheritance tax or income tax?
But as the saying goes “a swallowed piece has no more flavor” and we must go even further in tax cuts, believes Emmanuel Macron.
Especially since public opinion has the impression that it is above all on the richest taxpayers, as well as on companies, that taxation has fallen mainly during the previous five years with the transformation of the ISF into a tax on real estate, the flat rate tax on capital income or even reductions in corporate tax rates.
So which taxes could take a glide hit in the coming months? For now, mystery. But Bercy is working on it and will report his findings to the Head of State in the coming weeks. The paths contemplated: a further reduction in social security contributions to have a net salary closer to the gross. Reductions in the inheritance tax, via planned by the minister Gabriel Attal last April.
Or even a new impulse in the income tax with the doubling of half of the tax for the first child. While the birth rate is falling dangerously in France, this tax increase would have the merit of killing two birds with one stone: restoring purchasing power by easing the tax burden and encouraging households to have children. This track seems, however, for the moment rejected by the Ministry of Finance.
Tax pressure remains strong
If taxation has fallen over the last five years, France continues to be one of the countries that still has the highest tax burden.
The country remains the second in Europe according to the OECD. The share of tax revenue represents more than 45% of GDP in France. Only Denmark has a higher rate (47%). But Italy, Belgium, the Netherlands, Germany, Spain, not to mention countries like the United Kingdom or the United States, have lower rates than France.
The Minister of Economy, who is annoyed that France is usually at the top of this type of ranking, will reveal his proposals in a few weeks.
In the country’s stability program for the period 2023/2027 sent to the European Commission at the beginning of the year, however, there is no mention of a tax cut for the middle classes. On the contrary, new measures are foreseen that should lead to a return of around 8 billion euros in 2025. However, this is not incompatible with tax cuts.
In 2022, the corporate tax rate reached its lowest historical level in France (25%), and yet the tax revenue from this tax on profits reached 62 billion euros, that is, 3 billion more than expected.
Source: BFM TV
