2024-10-14 10:07:00
The government does not appear to have followed through on its tax increase plans.
The effort had to be moderate, contained, concentrated only on the richest. The more days pass, the more Michel Barnier’s commitments melt like snow in the sun. Tax increases will hit the wallets of all families. Subtlety, compared to the Prime Minister’s initial statements? This is not exactly a tax increase, but an increase in various taxes. While the forecast of an increase in the heavy electricity tax is already causing discussion among the population and politicians, a new project has just been put on the table and it seems equally flammable.
The Echoes claim that Michel Barnier proposes to quadruple VAT on electricity and gas subscriptions. Currently for this part of the bill it is 5.5%. The prime minister plans to increase this to 20%, “in accordance with European Union law”, according to the bill. If this were confirmed, the electricity subscription would increase by around 20 euros per year for consumers and by around 15 euros per year for gas.
In reality, the consumer will not pay more. The pure cost of electricity (KwH price) will decrease so much from February 1st that the overall bill will decrease, even if VAT and another tax (TICFE, read below) will be significantly increased by the government. However, for 80% of the French, while the increase should have been around 15% in a few weeks, it will only be 9%.
In addition to VAT on electricity, Michel Barnier also proposes to increase the internal tax on final electricity consumption. This is a small item on your electricity bill, included in the total price paid. At the outbreak of the war in Ukraine the price rose to €1/MwH. It has since been gradually increased to reach the current level of €22.50/MwH. The initial project was that in 2025 it would be brought to the pre-crisis level, i.e. €32.44/MwH. However, to obtain greater revenues, these will be much higher in 2025 and will be around €50/MwH.
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. Even if the government will have the possibility to bring into force with 49.3. At the risk of being overwhelmed…
12.07 – 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.
11:02am – A business tax extended
Another hard blow for professionals: the contribution on business added value (CVAE) will still have to be paid, at the same level, from 2025 to 2027. While its rate was supposed to gradually decrease until 2027, before disappearing, the government has decided to maintain the current level (0.28%) for the next three years. The reduction will then be staggered over the following three years, postponing the disappearance of this tax to 2030.
10:21 – Taxes rising sharply, but electricity bills falling: why?
Despite the announced increases in VAT and TICFE, consumers will not pay more for their electricity. And it will save money too. From February 1st the pure cost of electricity (price per KwH) will decrease so much that your overall bill will decrease, even if taxes increase. However, for 80% of the French, while the increase should have been around 15% in a few weeks, it will only be 9%.
10:17 – How much will the increase in this tax cost families?
For example, for a 60 m2 apartment (consumption of 4800 KwH/year), the annual amount of the TICFE (if it is 50 €/MwH) will increase from 120 to 288 euros. For a 100 m² house (10,000 KwH/year), the expense will increase from 250 to 600 euros per year. These are the average consumption levels established by Engie depending on the housing types.
10:11 – Main tax on electricity doubled
On the sidelines of the presentation of the 2025 budget, on October 10, the government confirmed that electricity will decrease… but that the famous TICFE will increase. The exact increase will only be decided at the beginning of the year, but one course of action will be followed: “ensure a reduction of at least 9% in the regulated electricity sales tariff from 1 February 2025”. Bercy works on a range “around €50/MwH”, while it is currently around €21/MwH, more than double, and a higher level than that known before the energy crisis.
10:04 – How much will the cost of the subscription increase for private individuals?
If the plan to increase VAT on electricity and gas subscriptions were successful, this would lead to an increase of around 20 euros for electricity and around fifteen euros for gas, for private individuals.
10:00 – An increase in VAT on electricity and gas is expected
This is the new voice of the moment. Second The EchoesMichel Barnier plans to increase VAT on electricity and gas subscriptions. Today at 5.5%, it would rise to 20% in 2025 to comply with European law, according to the project consulted by the business daily. There is therefore to fear a new increase in taxation which will affect all French people.
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