Tax gesture towards a flat tax cut on income – Les Echos

The contours of the tax act of Hollande specify. Reportedly, the track that holds the rope is that of a flat reduction in income tax for the middle class, as was the case in 2014. The subject must still be discussed Thursday morning during a meeting between Prime Minister and President of the Republic, so that the lines can still move by then. But it seems that at this stage, the other options in the study – those with a higher premium activity or CSG decline for retirees are excluded

Already postponed once, the final decision must be taken this week as the 2017 budget deadlines are approaching. The finance bill must be passed by the Council of State next week. And the High Council of Public Finance must decide on macroeconomic budget assumptions (growth, deficit, etc.). However, the magnitude of the tax cut depends, ultimately, the public deficit forecast.

Ambitions lowered

For now, the government is working on a tax measure of approximately EUR 1 billion or less. This is the consequence of a weaker-than-expected growth. In June, the head of state had raised to a maximum of 2 billion euros, if the growth forecast would be raised to 1.7% for 2017. The current situation is not associated with such progression GDP next year, far from it.

Without being able to waive this tax cut, as has already been announced, the executive has its sights down, as suggested by the Minister of Economy and Finance, Michel Sapin, last week: “the margin is not the same, keep talking 2 billion, we are watching within the current data what are the margins “, he had said on Radio Classique.

one option is that of a reduction flat tax on income in 2016 would be privileged, on the model of the tax cuts of the summer of 2014. at that time, taxpayers with incomes less than 1.1 SMIC head had benefited a rebate of up to 350 euros (for a single) or € 700 (for a couple). The measure had benefited 4 million households for a total cost of 1.3 billion euros.

For simplicity and readability

Unlike what was done in 2014, this new rebate would be sustainable, that is to say, it could be included in the tax code as the discount (a formula that softens the entry in the tax schedule). This is for simplicity and clarity that the government opted for the lump down, rather than touch the scale or formula for the discount, unknown to the general public. The idea of ​​a tax exemption on income for young people during the first year of reporting was also put on the table, but it appeared too complex to implement.

As for households targeted by this lump down, their exact number has yet to be calibrated. François Hollande was shown a preference for the middle class, that is to say, households in the bottom of the tax scale. The question is to what level of income this “rebate” will apply

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