Edouard Philippe, Prime Minister, announced on Wednesday that the abolition of the housing tax for the 20% of the wealthiest French people would be done in three stages, between 2021 and 2023.
“We received five out of five of the messages of tax exasperation that the French sent us. “In his general policy speech, Edouard Philippe made every effort this Wednesday to provide concrete proof of his government’s determination to reduce the tax burden.
The executive has presented for the first time a precise timetable for the announced abolition of the housing tax. For 80% of the French, this is still scheduled for 2020. It remained to be seen when it would intervene for the 20% of the wealthiest French people. “The abolition will take three years,” the head of government announced.
It will start in 2021 and end in 2023. The Prime Minister also confirmed the outlines of the €5 billion reduction in income tax (IR) promised by Emmanuel Macron to the middle classes at the end of April. This will affect 16.8 million households, for an average gain of 304 euros.
The revised income tax haircut mechanism
In detail, the biggest gain will be for the 12 million households in the 14% bracket (whose benchmark tax income currently ranges from €9,964 to €27,519), where the rate will fall to 11%. The most modest of these households will also benefit from a softer entry into taxation, with the revision of the so-called discount mechanism. For the 30% tranche, the gain will be more modest (180 euros), then nil for the last tranches. This will be achieved by reviewing the criteria for entry into the brackets: the second bracket subject to taxation will start from 25,405 euros against about 27,000 euros before, the third bracket from 72,643 euros and the last one at 156,244 euros.
With all these measures, Edouard Philippe boasted a “historic tax cut” for households, with a reduction of 27 billion euros over the five-year period. In total, if we add the reductions granted to companies, the reduction in compulsory taxes by 2022 will be “a little higher” than the official target of 1.4 percentage points of GDP, according to Bercy.