Wednesday, August 20, 2014

Hollande promises tax cuts for the middle class – Echoes

Hollande promises tax cuts for the middle class – Echoes

The head of state announced a new tax relief on more ambitious than voted this summer income. The merger of the premium for employment and RSA activity will take place in 2016

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That was a year ago to the day. “ I am very sensitive to this tax ras-le-bol I feel from our citizens, be they households, consumers, or whether they are businesses, and that we the listen. “Pierre Moscovici, Minister of Economy and Finance, plunging the government embarrassment by putting words on a growing protest. The episode did date one year later, it is only a question of tax cuts

Having established urgently a tax reduction. 350 euros for low-income households (less than 1.1 SMIC) this year, François Hollande yesterday announced the result of the program: a further decline in tax in 2015, but in the broader scope because it will address the “modest means and taxpayers,” he said in an interview with “World” without elaborating. He also promised a reform of welfare benefits scheduled for 2016 through a merger of the earned income tax (a tax on the income of poor households for credit) and RSA activity (a social benefit for the working poor ). Two large projects that had already been addressed, but that the government had so far given to address because of their complexity (see below).

The 2015 budget, presented in late September, so include a reform of “low scale” of the income tax, that is to say, the first installments of income tax, with a concentration of important threshold effects. The measure must sustain and amplify the tax reduction of EUR 350 passed last summer because a large proportion of the budget of EUR 2.5 billion reduction measure contributions, censored by the Constitutional Council early August, will be reallocated.

The details of this reduction are yet to be adopted, and it is not certain that it will result in a lower flat of the same type this year. Services Bercy might inspire the work of Dominique Lefebvre appointed PS on the subject, made before summer. The catch: the tax reduction will only apply to the fall 2015 Gold executive wants a measure whose effect would be closer. So he is considering setting up a system that would be in the first third of the income tax, usually paid in February.

The other part of the reform aims to bring the premium for employment, and RSA activity. These two devices, which are built wrong them, are the subject of recurring criticisms (lagged effect over time, dusting, low usage …). The executive should be deleted in the 2015 budget the employment premium (EPP), which is one year lag since it is a tax credit. This removal will be effective until the following year and therefore no budgetary impact in 2015 however it will release two billion euros from 2016, which can be fed back into the reform. The aim is to establish an incentive to return to work, and not replace the provision of lower labor costs censored early August.



less than 4.5 billion cost

The cost of these reforms is not yet quantified precisely, but will not exceed the budget of 4.5 billion initially planned by the executive in its Stability Programme. It might even be a little lower.

Announcements, also designed to meet the critical part of the majority holding the 41 billion cuts costs Pact responsibility for business a little too generous, have not fully achieved their goal. If the PS spokesman, Olivier Faure, welcomed the “determination, consistency and combativeness” of the head of state, the slingers were yesterday, more reserved. “Hollande reaffirms its position clearly, but I regret that it does not announce any inflection to reflect the situation,” lamented one of their leaders, the Socialist deputy Laurent Baumel.

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