Tax increase: a new tax targeted, many French people concerned

“Tax increase: a new tax targeted, many French people concerned”

The deputies have decided to increase a new tax paid by thousands of French people.

The saga is far from over. After the presentation of the various tax increases by Michel Barnier, it is now the deputies who are working on the subject, with the freedom to propose adjustments as they see fit. Several additional increases have been submitted and one of them has obtained a first green light from the Parliamentarians elected to the Palais Bourbon. And it should make thousands of French people grind their teeth.

Since 2018, it is possible that money earned through capital gains from life insurance, PEL, retirement savings or company dividends is only taxed at 30%. A rate that is too low in the eyes of many deputies who have been trying, for several years, to increase it. This year, given the new organization of the National Assembly, a proposal to increase the rate of this single flat-rate levy (PFU) to 33% has been formulated and adopted. This could bring in an additional 800 million euros into the state coffers.

However, this increase was only adopted by the Finance Committee. It must now be included by the government in the final text and also adopted by the deputies and senators. However, Michel Barnier and his teams still have plenty of time to ignore this proposal since they could force the overall text through, with 49.3. Unless the Assembly votes for censure.

Furthermore, an increase in VAT on electricity is being considered, as is an increase in the domestic tax on final electricity consumption. Other measures include an exceptional tax on 65,000 fortunes earning more than 250,000 euros per year, and an “exceptional participation” for two years for large companies on profits that “make a turnover of one billion or more” (440 groups concerned), but also an increase in taxation on polluting transport, as well as a change in taxation for AirBnb rentals.

Of course, these are only the directions desired by the government. The bill will be debated in the National Assembly between October 21 and 25, followed by a vote on Tuesday 29, then the Senate will enter the race in turn. Between the debates and the amendments, there is no doubt that the 2025 budget could still be significantly modified.

Latest updates

17:14 – Certain salaries taxed more heavily by the State

This is one of the flagship measures concerning the world of work. For several years, employers who pay their employees up to 4,895.45 euros net (3.5 times the minimum wage) have benefited from reductions in employer contributions. A system that the government wants to change.

Between 2025 and 2026, exemptions from employer contributions will gradually decrease for a salary between the minimum wage and 1,820 euros (1.3 times the minimum wage), then for salaries between 2,520 and 4,200 euros. In concrete terms, employers who have employees at these remuneration levels will pay more contributions than they currently do.

On the other hand, the current level of contributions will decrease for employees paid between 1820 and 2520 euros.

16:49 – No more tax on gas boilers

It was an unexpected decision that went relatively unnoticed. When presenting the 2025 budget, the government announced that buying a gas boiler would be taxed more from 2025. This equipment previously benefited from a VAT rate of 5.5%. However, from January 1, it will increase to 20%. The measure, which should save 200 million euros, is also linked to compliance with European law.

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16:09 – LFI wants a new tax on the richest

LFI deputies have tabled an amendment to create a new tax on the richest. This new tax would apply for 30 years and would target the 10% of the richest households in the country. The left wants to tax all assets (financial and real estate) at… 0.17% when they exceed 633,200 euros. It is from this amount that the tax should be paid, on the upper fraction. For assets at… 1 million euros, that would represent… 623.56 euros of additional tax ((1,000,000 – 633,200)*0.17%).

16:00 – MPs increase tax on dividends

During the discussions on the amendments, the deputies adopted one of the many texts tabled concerning the increase of a tax. The elected representatives voted in favour of an increase in the single flat-rate levy (PFU) from 30 to 33%. This is a tax applied to capital gains from life insurance, PEL, retirement savings or company dividends. Concretely, for 1000 euros of dividends received, it was necessary to pay 300 euros of taxes in 2024. In 2025, it could be 333 euros. Could because, at this stage, the text is not included in the law. It will be submitted again to the vote of all the deputies next week.

15:26 – Higher “notary fees” ?

When purchasing real estate, various fees are paid in addition to the price of the property. These are paid to the notary but, in reality, part of them is paid to various organizations, including the Department. Today, these communities can apply a rate between 3.8 and 4.5%. The communist deputies propose that they could go up to a rate of 5%, which would mechanically increase the bill for a property purchase.

10/16/24 – 06:23 – When will the deputies vote on the tax increase ?

At this stage, the announcements of tax increases are only in draft form. The debates in the National Assembly will begin on Monday, October 21. The deputies will work until Friday, October 25 on the “revenue” part, i.e. the question of tax increases. They should vote on Tuesday, October 29 to validate or not the measures. Then, the question of expenditure, and therefore of the savings also promised by the government, will be studied at from Tuesday, November 5th.

10/15/24 – 21:14 – What happened to the main old "temporary" taxes ?

“Temporary” taxes are not the first time that a government has sought to implement them. This formula has already been used in the past. And the temporary nature quickly became permanent. This is particularly the case with the Contribution for the Repayment of Social Debt (CRDS), a tax levied on all income to reduce social security debt. Faced with the organization's gaping financial hole, it has been pushed back until 2033… or 2042! That's not all. The exceptional contribution on high incomes (CEHR), paid from 250,000 euros declared to the tax authorities (or 500,000 for a couple), was supposed to last until 2017, the year in which the public deficit was supposed to be “zero”. Suffice to say that it is not ready to disappear.

10/15/24 – 6:22 PM – Will MPs vote in favor of tax increases? ?~

That has been the question since the results of the legislative elections. Split into three large blocs, the National Assembly is more divided than ever. So what about the 2025 budget ? Not having the support of 289 deputies (absolute majority), the government risks coming up against opposition from the NFP and the RN. However, it has a weapon to force the budget through: the famous article 49.3 of the Constitution. If this is used, a motion of censure can then be voted on. If it is adopted (289 votes minimum), the government is overthrown and everything starts again from scratch. If it is not adopted, the text then comes into force because this means that a majority of deputies did not oppose the government. What will the scenario be like ? The fog is still thick: will the NFP and the RN form an alliance ? This is the whole question for the coming weeks. If the NFP has already expressed its opposition to the government, the RN has announced that it will not censor “on principle”. The fact remains that the party remains silent on Michel Barnier's tax increase plan.