Economy
The withholding tax on rails./photo D.R.
the tax reform bill has been forwarded to the national Assembly. Bercy it details the modalities of the future withholding avoiding windfall.
The great reform of the income tax to be deducted at source from January 2018 will be well soon passed by parliament. The Finance Committee of the National Assembly has indeed receive from Bercy Bill. The Minister of Public Finance and Economy, Michel Sapin, wants to make the deduction at source irreversible and speeds for the law to be adopted before the presidential election.
To implement this major reform the government has created a heavy machine to move from declarative system to withholding tax, directly on the payroll of the employees. 2017 will be (on paper) a blank year that is to say a year without income tax. Really ? Not quite. To avoid double taxation in 2018, taxes due for 2017 are not claimed. It will be a “lost year” for taxpayers. However, it will declare its taxes on 2017 spring 2018. The administration will treat the statements but will send a notice of exceptional taxation. The amount due will be well specified but will be supplemented by a statement that taxpayers do not have to pay that amount.
In January 2018, you pay your taxes on your wages earned at the end of each month . An additional deduction line therefore appear on the payroll, thereby decreasing net income.
Avoiding deadweight
But the government has taken precautions to avoid any windfall. Indeed, all income from 2017 normally not subject to income tax will not be affected by the reform. Dividends from shares, capital gains on securities (stock sales) and real estate, profit-sharing, etc. will not be affected. The tax on this income in 2017 will be well paid. All these revenues must therefore be declared well and it will be the government that will determine case by case whether they should be subject to tax or if it enters the system of blank year. This whole mechanics, however, may be questioned in case of victory of the right in the 2017 elections because it promised to repeal the reform.
To lower taxes
Christian Eckert, the state secretary in charge of the Budget announced that the next tax cut will be announced “next week”. It should aim “the French modest and middle classes.” The decrease could affect the income tax, but the government is also working on the assumption of a change in the CSG or premium of activity. However the President of the Republic has already conditioned the decline in growth above 1.5% in 2017.
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