Government Censorship: Income Tax, Pensions… Will Your Purchasing Power Be Impacted ?

As Michel Barnier's government fell on the evening of Wednesday, November 4, 2024, under a motion of censure, this de facto leads to the cancellation of the 2025 Social Security budget. What about income taxes and retirement pensions? ?

This Wednesday evening, parliamentarians voted. A censure that leads to the cancellation of the 2025 Social Security Financing Bill (PLFSS), and more particularly a strong probability of freezing the income tax scale. It is therefore inevitably the scale of the year 2024 which will be applied to your income of 2023, according to MoneyVox.

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Laurent Saint-Martin, Minister of the Budget, explained in the columns of Parisien that “if we renew the 2024 budget, we will mechanically bring in 380,000 additional French households into income tax because the scale will not have followed inflation and 17 million households will also pay more. A loss of purchasing power, approximately 3 billion euros for our fellow citizens in 2025” . The indexation of the IR scale is not automatic, but is enacted each year in the finance law, and this every year or almost, according to the Senate on the 2025 budget.

Regarding taxes, you would pay more if your 2024 income has not increased. If it has stagnated, the sentence is the same. With annual inflation estimated at more than 2%, the cost of indexation is 3.7 billion according to the Senate. You can make an estimate with a simulator.

Retirees are the big winners ?

Seniors are surely the biggest winners in this story. While the PLFSS bill provided for a partial deindexation of pensions from January 1, 2025, the censorship came to cancel this measure.

The elected officials had voted for the pensions of the 17 million French people to be revalued by only 0.8%, i.e. by almost half of inflation. On July 1, for retirees receiving less than 1,500 euros gross per month, their pension was to be revalued again. Ultimately, the State would gain 3.5 billion euros, according to Thanks for the Info.

According to François Ecalle, economist and public finance specialist: “There is no Social Security financing law. But the funds continue to pay social benefits by applying the current legislation.” As stipulated in the Social Security Code, retirement pensions are revalued on January 1st based on the inflation index. The latter, over the period November 2023 – October 2024, being estimated at 2.2%, pensions would therefore be revalued by 2.2% on January 1, 2025, comments reported by Capital.