Tax: the report will relaunch the debate on tax reform – Les Echos

Tax: the report will relaunch the debate on tax reform – Les Echos

The Council of compulsory levies suggests making the CSG is not deductible from income tax.
But he dismisses the idea of ​​a merger.

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Nobody does not seem to believe in the great tax evening, not even the Council of compulsory levies (CPO), a body attached to the Court of Auditors. In a report commissioned by the Senate and published this morning, the CPO warns against the uncertain and complex effects of a big bang based on “fusion (…) s ‘income tax and the CSG through a simplified levy on income “ as proposed by Hollande’s commitment 14. This reform has long been pushed by the left because intended to make the simpler and more progressive tax: it would allow to vary the CSG based on income and thus higher taxes on wealthier households.

Considering this technically and politically difficult site (see below), the CPO, however, offers solutions … not really less controversial. It calls for improving “articulation” and “complementarity” of these two taxes can continue to coexist. Two lines of work are particularly explored: make the CSG is not deductible from income tax and deduct tax at the same time as income, rather than the following year. This is what he calls “contemporary tax” revenues.

The first track is the most sensitive. She had also been briefly explored last year, at the request of the General Rapporteur of the then Budget, MP Christian Eckert, now Secretary of State for the Budget before being quickly closed the face of prospect of losing millions of households, including among the middle classes. Currently, households deduct from their taxable income part of the CSG taken upstream on their income, often unknowingly. A system that generates a revenue shortfall estimated at 11.2 billion euros a year for the state. Which mainly benefits wealthier households and employees, say some socialist politicians. Specifically, remove this deductibility would increase taxes for all households, but especially for the rich: for the last two income deciles, the losses would amount to 43 euros and 132 euros each month, calculate the CPO. Conversely, the losses would be limited to households in the first three deciles.

Transition Year difficult

To avoid these effects, while François Hollande ruled out any tax increase some kind of 2017, CPO suggests fully recyclable gains of reform by reducing the scale of the income tax, pushing the threshold for entry into the tax, or reducing CSG different rate of 12%. While stressing the need to explain a reform that could be “misunderstood ” … Even compensated, it would be winners and losers.

Another line of work: make the “contemporary” tax revenue that tax but without necessarily going through the withholding. The benefit of such a measure is real, both for taxpayers whose income is irregular, but also for the public authorities could thus control more finely economic policy. The report suggests mandating the monthly levy for the employees, but stumbles in part on the difficulty of the transition year – during which two years of income would be taxed. The goal remains a priority to him.

Elsa Conesa, Les Echos