Which taxes were removed or reduced during Macron’s presidency?
Prime Minister Michel Barnier assesses the country’s budget situation “very serious”and did not rule out the possibility of raising taxes. While Emmanuel Macron’s two five-year terms in office were marked by tax cuts or abolition, they are a taboo for Macronists. In his farewell speech in Bercy, the resigning finance minister Bruno Le Maire claimed to have achieved: “55 billion euros worth of tax cuts” In a report published in July, the Court of Auditors estimated that tax cuts since 2018 contributed to the deterioration public deficit: “The impact is estimated at 62 billion euros in 2023.”
In detail, tax reductions or elimination tended to benefit the wealthiest or businesses, and the majority of households had to make do with few measures in favor of purchasing power.
Transformation of the solidarity tax on wealth into a tax on real estate wealth
Since when? Emmanuel Macron’s campaign promise to abolish the wealth solidarity tax (ISF) and replace it with a property wealth tax (IFI) was implemented in 2018.
Who is affected? The IFI concerns tax households holding real estate assets whose net value (the difference between the value of the property and any loans) is more than €1.3 million as of 1.well January of the tax year. This measure benefits the richest because it excludes securities and investments from the tax calculation. The aim of the reform was to support private investment and the growth of the French economy.
Which deficiency? France Strategie 2023 report predicts revenues will increase if ISF is maintained “It would be equal to 6.3 billion euros in 2022.” IFI brought in $1.83 billion that year, “related loss of income [au] replace [de l’ISF] would therefore arrive at the following amount by IFI: 4.5 billion euros “, According to France Stratégie.
Transforming the taxation of capital income to a “flat tax”
Since when? In addition to the abolition of the ISF, the 2018 finance law introduced a single flat rate tax (PFU) of 30%, known as the “flat tax”. », for income from savings: income from movable capital, dividends, property income, etc.
Who is affected? The aim is to simplify and reduce the taxation of savings in order to make the tax system more attractive, especially for the richest. The PFU replaces the taxation of capital income at the income tax scale. The previous system, sometimes perceived as complex and discouraging, resulted in progressive taxation that could reach 60% for the richest taxpayers, compared to 30% regardless of the amount declared with the implementation of the “flat tax”.
Which deficiency? The costs of implementing PFU in 2018 are as follows: 1.8 billion euros On behalf of the state, according to the economic, social and financial report annexed to the 2022 draft finance law.
Reduction in corporate tax rate
Since when? The 2018 fiscal law also provides for a gradual reduction of the corporate tax rate from 33.3% in 2017 to 25% in 2022. At the same time, the reduced rate for small and medium-sized enterprises (SMEs) remains at 15%.
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Who is affected? The corporate tax (CIS), also called the “corporate profits tax”, is levied on the results of French companies. The reform aimed to support private investment and economic growth.
Which deficiency? Preliminary assessment of the finance law on the IS rate reduction kept the budget cost 11.1 billion eurosThe weak economic performance of taxed companies and the decrease in the tax rate were also reflected in tax revenues: tax revenues are expected to fall by 4% from 71 billion euros in 2021 to 68 billion euros in 2022, according to figures from the Department of Financial Research and Statistics.
“Exit tax” reform
Since when? The “exit tax” was not abolished, as first announced by Emmanuel Macron in 2018, but was revised into a more targeted mechanism so as not to discourage investors.
Who is affected? “ The exit tax is a system that targets business leaders who are tempted by tax exile. The aim of the organization, which was founded in 2011 under the presidency of Nicolas Sarkozy, is to combat tax evasion by taxing 30% of the theoretical or hidden capital gains made by French people who owned shares in companies (stocks, bonds, etc.) at the time. They are moving taxpayers out of the country. They will be taxed if they sell their shares within fifteen years of moving abroad. 1well January 2019, Finance Law After leaving, he reduced the holding period for the shares to two years (there is an exemption from the “exit tax”).
Which deficiency? According to Bercy, it caused losses of 138 million euros to the state between 2012 and 2017, affecting an average of less than 400 people per year. If it is difficult to know the income from the “exit tax”, we can assume that the reduction in the period meant a decrease in the income from this tax for the State. In 2022, the National Assembly also voted to reintroduce the “exit tax” in its original form., thus reducing the period to fifteen years, against the government’s advice. According to the Montaigne Institute, a liberal think tank, this recovery could generate up to 67 million euros a year.
Abolition of housing tax on main residences
Since when? The abolition of this tax for the main residence was initiated by the 2018 finance law, first for the most modest households, then gradually generalized to all households in 1.well January 2023.
Who is affected? The housing tax is applied to every tax household that owns real estate, whether tenant or owner. This tax, which was abolished for main residences, is also applied to the secondary residences of owners or usufruct owners of furnished buildings and their annexes. This was one of the commitments made by the President in favor of the purchasing power of households by reducing mandatory deductions.
Which deficiency? Housing tax is represented by local governments 23.4 billion revenue In 2016. But the state is determined to compensate for the damage. The removal is usually compensated by the allocation of value added tax (VAT) revenue to local governments. The continuation of the housing tax reform has therefore caused further damage to the state budget due to revenue losses 2.8 billion euros in 2023, According to the Court of Accounts’ report dated April 2024.
Elimination of contribution to public broadcasting
Since when? The removal of the housing tax also brought about the end of the contribution to public broadcasting (CAP) in 2022. In fact, the recovery of the CAP was supported by the housing tax.
Who is affected? CAP, formerly called audiovisual copyright, is a tax on the ownership of a television set. It financed public broadcasting, such as France Télévisions or Radio France. This elimination also occurred within the framework of measures in favor of household purchasing power.
Which deficiency? According to the report, jointly written by the General Inspectorate of Finance and the General Inspectorate of Cultural Affairs, CAP represented 89% of public broadcasting funding and 3.1 billion euros In 2020.
This law, which has been repealed since 2022, will be followed by a reform of the financing of public broadcasting that has not yet been voted on. The government’s temporary solution to compensate for the loss is to allocate part of the VAT until the end of 2024. And then? For now, the discussion on the reform project has been postponed.
Removal of contribution to the added value of businesses
Since when? The rate of this tax has already been halved in 2023 and should be gradually reduced (by a quarter each year) until 2027, when it will be completely abolished.
Who is affected? A company value added contribution (CVAE), based on the added value produced during the reference period, must be paid by companies that generate a certain amount of turnover and whose activities are subject to commercial property tax. The aim of its elimination is to continue reducing production taxes.
Which deficiency? The CVAE provided €9.6 billion to local governments in 2021 and 9.3 billion Compared to the 15 billion figure in 2020, last year at full speed in 2022.
Since 1well From January 2023, the CVAE product is no longer taken over by local authorities, but by the State. To compensate for the loss of this transfer, a portion of the VAT is being remobilized. The loss is thus approximately 5 billion euros According to the 2024 revenue assessment, for the State in 2023 (the year in which the rate was already halved).