2023-12-26 17:53:14
Published on Dec 26 2023 at 4:40 p.m. Updated Dec 26 2023 at 4:53 p.m.
Who did Emmanuel Macron give a gift to by abolishing the housing tax? This unprecedented tax cut was intended to be a measure to support purchasing power. But the windfall thus redistributed could have been captured by the owners alone if it had resulted in an equivalent increase in rents and property prices.
As part of its recent work on real estate taxation, the Court of Auditors wanted to get to the bottom of it and asked the Institute of Public Policies (IPP) to look into the subject. Bottom line: the impact is real, but modest. “A part, certainly limited, of the gain in purchasing power was captured by an increase in real estate prices and rents,” summarizes Pierre Moscovici, the first president of the Court of Auditors.
700 euros of purchasing power
The question is important. The abolition of the housing tax (TH) is a major fiscal change – both in terms of symbol, since it is a marker of the Macron presidency, and in terms of amounts. Before its gradual disappearance (for 80% of French people between 2018 and 2020, then for the remaining 20% between 2021 and 2023), it was paid by 24 million households and brought in some 19 billion euros into municipal coffers (to which the State added 4 billion to compensate for the exemptions).
For each household concerned, the disappearance of this local tax therefore represented more than 700 euros of restored purchasing power. On condition that the municipalities do not increase the property tax for owners by the appropriate amount – which has not been the case, according to the IPP. And provided that owners do not take advantage of this to increase rents for tenants (or prices for buyers).
In order to assess this impact of the removal of the TH on the real estate market, IPP researchers begin by measuring its weight in household budgets, before the reform. On average, TH reduced their income by 2.36%. But depending on the municipalities (where land does not have the same value, and where the voted rates differ), this exposure rate varies. It was around 1.3% where the TH was lightest, compared to 3.5% where it was particularly salty – particularly in the south-east of France, along the coast and in mountain communities.
50 euros per m2
Supporting figures, the study shows that the greater the weight of the TH in the income of residents before its disappearance, the more real estate prices in the municipality have increased.
The same dynamic is observed for rents. “At three years, the effect on real estate prices of 1 percentage point of TH/additional income was almost 50 euros more per square meter,” write the economists. For rents, “0.2 euros per m2”. This gap corresponds to the – modest – share of the TH reform captured by owners alone.
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