2024-09-19 09:12:44
Michel Barnier, the new Prime Minister, will consider increasing some taxes. But who will be affected?
Finally
“Is it possible not to increase tax ? Yes, and we even have to drop them!” These words were spoken by Michel Barnier himself. In an interview given Echoes In 2021, the new Prime Minister said that he wants to reduce the tax pressure on France. But by that time, the man who had become Matignon’s oldest tenant and only candidate for the 2022 Republican nomination since then, seemed to have changed his tune. But where?
Apparently, Michel Barnier has never shown that he wants to increase taxes. The rumor has been growing for a few days after Gérald Darmanin reported to the media that the septuagenarian did not rule increasing the level of taxation in the country. Enough to provoke general outcry and anger, although it could be simply an organized dance – to test the reactions and popularity of such choices -, or even a small political blow.
In fact, according to what is circulating, the methods that will be studied by the future head of government will not affect most families. What will he consider? Who can pay more? We take stock.
Will we pay more income tax?
Let’s get this myth out of the way. As rumors have been circulating since the beginning of the week, the idea is not at all to make the majority of French people pay more income tax. A person with a minimum income, a total of 1800/2000 euros or 3000 euros per month will not pay more on the income earned through work. All political forces, from right to left, this reaction is possible.
Will the supermarket, restaurant or electricity bill increase due to the increase in VAT?
In the supermarket, in restaurants or even on the electricity bill, the money is divided into two parts: what the company actually receives and what must be paid back to the State. This last part is Value Added Tax (VAT). If the fixed rate is 20%, it is lowered to 5.5% in some sectors (food and energy in particular). Can these exceptions be sacrificed and, therefore, increase the amount of money paid by customers?
Here again, this does not seem to be the lever intended by Michel Barnier. The Governor of the Bank of France has only suggested that he will not be against this possibility. “In general, it is good for taxes to have a broad base – without many loopholes and at low rates,” François Villeroy de Galhau told Paris.
Tax cuts about to be sacrificed?
For individuals and professionals, France has a large number of measures to reduce the amount that will be paid in taxes. However, some may be in Michel Barnier’s sights and soon disappear. Let many French people be calm: there is no question of touching the reductions linked to child care, single parents or others…
The idea is rather to attack devices that cost a lot of money and that only affect a few people, but those that are against environmental goals. The governor of the Banque de France summed it up: “Tax gaps are making large groups and families more privileged. This may include lower taxes for non-road diesel, kerosene and marine fuel, but also a lower tax rate for diesel compared to gasoline. In 2022, reduced taxes represent a shortfall, per year, of 6 billion euros according to the Institute of Economics for the Climate.
The rich have views, who can pay more taxes?
Increasing the state’s income without affecting the budget of 99% of the French people, the idea therefore finally has something to appeal to. For this, it is the thickest wallets that will be in the eyes of the tax authorities, with the return of a symbolic system: wealth integration tax (ISF). Launched by Emmanuel Macron in 2017, it affects 358,198 homes and has brought, last year, more than 5 billion euros into the coffers of the Public Treasury. The replacement system – real estate tax (IFI) – turns out to be a very low tax wind: “only” 175,980 families have to pay, for a total income of 1.9 billion euros in 2023 3 billion income: not a straw, when we know that we have to find 20 per year from now.
If this measure seems to be a sign of openness to the left that promotes this idea, it has on the other hand the problem of targeting the Macronists and the Republicans. As for the National Rally, he said that he was in favor of a tax on money. However, Michel Barnier has not spoken publicly about such a project, which would change the flag size of the first five-year period.
More taxes to pay for businesses…?
Emmanuel Macron has boasted about it since he arrived at the Elysée: the reduction of taxes on businesses is not necessary and effective for the economy. Between 2017 and 2022, the President of the Republic significantly reduced taxes on corporate profits. When he arrived, the State received a third of the proceeds. For 1000 euros of profits, 333 have to be paid to the Public Treasury. From now on, the score is only 25%, or 250 euros for 1000 euros.
Between 2017 and 2022, some 11 billion euros (average over five years) were collected by the tax authorities. Enough to provide new room for innovation for companies to invest, while emptying state coffers. But that’s not all: the tax on production has also been greatly reduced.
These two levers seem to be, in the eyes of Michel Barnier, an important financial resource. “Michel Barnier is very tempted to find ways to save money by focusing on corporate tax,” he said. Paris.
An increase in corporate tax seems to be under consideration, but no clear new tax level has been proposed yet. Especially since this carries the risk of a decrease in investment, and therefore in hiring, which can increase unemployment, and therefore … state spending.
… and a new corporate tax?
Furthermore, Gabriel Attal’s successor “is in favor of a tax on excess profits” as Laurent Wauquiez, deputy LR and boss of the right-wing group in the Assembly, indicated by The Parisian. Currently, such a tax is in force, from 2024, on road and airport concessionaires. The state receives a portion of the excess profits received compared to the predictions included in the contract.
Michel Barnier can extend to energy companies and increase energy supplies: a rate of 4.6% applied to labor income which exceeds 120 million euros. But again, this is just an observation.
Moreover, Les Echos etc Agefi other methods are put forward: of new taxes on EDF, Engie and TotalEnergie, but also the end of the tax regime benefit for CMA CGM, whose director (Rodolphe Saadé) is close to Emmanuel Macron.
#pay #decided