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Darmanin unveils thresholds for tax exemption

Ⓒ AFP/Archives – ludovic MARIN – | The Minister of Public Accounts Gérald Darmanin in the courtyard of the Elysée Palace in Paris on September 6, 2017

The Minister of Public Accounts Gérald Darmanin said Wednesday that the exemption ceilings for the housing tax, which 80% of the French will no longer have to pay within three years, would be 27,000 euros for a single person and 43,000 euros for a couple without children.

Speaking to the Economy of the World Club, the minister said that these amounts concerned the reference tax income, obtained in particular after the 10% wage abatement.

His cabinet then told AFP that for a single person, this corresponded to a real income of 30,000 euros annually and for a couple, 48,000 euros.

For a couple with a child, the ceiling to be exempt from tax is 49,000 euros of reference tax income, or about 54,000 euros in real income. It will then be necessary to add 6,000 euros to the reference tax income for each additional child.

“80 per cent of those who pay housing tax today will not pay it in three years,” Darmanin told the Economy Club, pointing out that 12 million households were already exempt .

In 2018, it is expected that the tax will fall by 30% for these 80% of households, in other words about 17 million households.

During the presidential campaign, the En Marche team had indicated that the removal would concern, for the first stage planned in 2018, the only households with an income of less than 20,000 euros per year per tax unit.

Mr Darmanin explained that the choice to exempt 80% of the French was taken in the light of the fact that this proportion represented “about the same amount, a little more in terms of tax mass than the 20%” which will continue to the 80% who will be exempted in the future represent “about € 10.4 billion”, against “about € 9 billion” for the remaining 20%.

– Communities: the track CSG –

According to the minister, those who will continue to pay the residential tax will pay “the same”, in other words they will not see their tax increase.

“Then will raise the question of local taxation,” he added.

The government could, in three years, review the financing of local governments by granting them, for example, a part of the income from the generalized social contribution (CSG), while warning against the risk of “reinforcing territorial inequalities” Darmanin.

Currently, housing tax represents 36% of municipal tax revenues. Emmanuel Macron promised that the shortfall linked to the reform would be compensated “to the euro by” the state.

The housing tax, due for the main dwelling or a second home, is often criticized for its inegalitarian aspect, being higher in the communes poor in companies than in the rich communes.

It is based on the cadastral rental value of the dwelling, which was estimated in the 1970s and has changed little since.

According to figures from the Directorate-General of Public Finance, the tax on housing, paid by 30 million households, brought back 22 billion euros to local and regional authorities in 2015.

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