a new targeted tax worries many French people

2024-10-17 17:01:00

MPs have decided to increase a new tax paid by thousands of French people.

The series is far from over. After the presentation of the various tax increases by Michel Barnier, the deputies are now working on the topic, with the freedom to propose the adjustments they deem appropriate. Several further increases were presented and one of these obtained the first green light from the parliamentarians elected at Palazzo Borbonico. And it should make thousands of French people shudder.

From 2018, money earned through capital gains on life insurance, PEL, retirement savings or corporate dividends may be taxed at just 30%. A rate that is too low in the eyes of many deputies who have been trying to increase it for several years. This year, taking into account the new organization of the National Assembly, a proposal to increase the rate of this single flat rate levy (PFU) to 33% was formulated and adopted. This could bring another 800 million euros into the state coffers.

However, this increase was only adopted by the Finance Committee. Now it will have to be integrated by the government into the final text and also adopted by deputies and senators. However, Michel Barnier and his collaborators still have plenty of time to ignore this proposal since they could approve the overall text in force, with clause 49.3. Unless the Assembly votes for no confidence.

Furthermore, an increase in VAT on electricity is expected, as well as in the internal tax on final electricity consumption. Among other measures, that of an exceptional tax on 65,000 estates earning more than 250,000 euros per year, that of an “exceptional participation”, for two years, of large companies on profits that “achieve a turnover equal to or greater than one billion” (440 groups affected), but also an increase in taxation on polluting transport, as well as a change in taxation for AirBnb rentals.

Obviously these are only the indications wanted by the government. The bill will be debated in the National Assembly between 21 and 25 October, followed by a vote on Tuesday 29, then it will be the Senate’s turn. Between debates and amendments, there is no doubt that the 2025 budget could still be extensively amended.

7.01pm – From 20 to 41% surcharge for large companies

The government’s plan involves increasing taxation on some companies. Those with a turnover of between 1 and 3 billion euros will have to pay 20.6% on top of profits tax. The additional rate will rise to 41.2% for companies whose turnover exceeds 3 billion euros. These rates will then be halved in 2026.

6.27pm – Several car tax increases

This is a delicate measure: the increase in taxes on cars. The government plans to tighten sanctions on cars that emit more CO2. Today at 118 g of CO2/km the threshold for triggering the fine will be lowered to 113 g in 2025 then to 106 g in 2026. At the same time the amount of the fine to be paid will increase by 10,000 euros per year until 2027 for the most polluting cars. Furthermore, the tax linked to the weight of the car will also start earlier: from 1,500 kg in 2025 compared to the current 1,600 kg.

5.14pm – Some salaries are more imposed by the state

This is one of the key measures affecting the world of work. For several years, employers who pay their employees up to 4,895.45 euros net (3.5 times the minimum wage) have benefited from reductions in employer contributions. A system that the government wants to change.

Between 2025 and 2026, exemptions from employer contributions will progressively decrease for a salary between the minimum wage and 1,820 euros (1.3 minimum wage), then for salaries between 2,520 and 4,200 euros. Concretely, employers who have employees at these salary levels will pay more contributions than current ones.

However, the current level of contributions for employees paid between 1,820 and 2,520 euros will decrease.

4.49pm – No more taxes on gas boilers

It was an unexpected decision and went relatively unnoticed. During the presentation of the 2025 budget, the government announced that from 2025 the purchase of a gas boiler will be taxed more. These devices previously benefited from a VAT rate of 5.5%. However, from January 1st it will increase to 20%. The measure, which should save 200 million euros, is also linked to compliance with European legislation.

4.09pm – LFI wants a new tax on the richest

LFI deputies presented an amendment to create a new tax on the richest. This new tax would be applicable for 30 years and would hit the richest 10% of families in the country. The left wants to tax all assets (financial and real estate) at… 0.17% when they exceed 633,200 euros. It is from this amount that tax should be paid, on the highest fraction. For goods worth 1 million euros, this would represent… 623.56 euros of additional tax ((1,000,000 – 633,200)*0.17%).

4pm – MEPs increase taxes on dividends

During the discussion on the amendments, deputies adopted one of the numerous texts presented which concerns the increase of a tax. Those elected voted in favor of increasing the single flat rate levy (PFU) from 30 to 33%. This is a tax levied on capital gains from life insurance, PEL, retirement savings, or corporate dividends. Concretely, for 1000 euros of dividends received, 300 euros of taxes had to be paid in 2024. In 2025 it could be 333 euros. It could because, at this stage, the text is not included in the law. The issue will be put to the vote of all parliamentarians again next week.

3.26pm – Higher “notary fees”?

When purchasing a property, various commissions are paid in addition to the price of the property. These are paid to the notary but, in reality, a part is paid to various bodies, including the Department. Today these communities can charge a rate of between 3.8 and 4.5%. The communist deputies propose to reach a rate of 5%, which would mechanically increase the bill for purchasing a property.

10/16/24 – 06:23 – When will MPs vote on the tax increase?

At this stage, announcements of tax increases are only expected. Debates in the National Assembly will begin on Monday 21 October. The deputies will work until Friday the 25th on the “revenue” part, therefore the question of tax increases. They should vote on Tuesday 29th to validate the measures or not. Then, from Tuesday 5 November, the question of spending will be studied, and therefore also of the savings promised by the government.

10/15/24 – 9.14pm – What happened to the main old “temporary” taxes?

The “temporary” taxes are not the first time a government has tried to implement them. This formula has already been used in the past. And the temporary nature quickly turned into permanent. This is the case, in particular, of the Social Debt Repayment Contribution (CRDS), a tax levied on all income to reduce social security debt. Faced with the organization’s huge financial hole, the project is postponed to 2033… or 2042! But that’s not all. The exceptional contribution on high incomes (CEHR), paid starting from 250,000 euros declared in taxes (or 500,000 as a couple), would have lasted until 2017, the year in which the public deficit would have been “zero”. Suffice it to say, he’s not ready to disappear.