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20 million households in France 'to pay more tax'

AFP/The Local · 27 Aug 2013, 16:09

Published: 27 Aug 2013 16:09 GMT+02:00

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The report will not make happy reading for millions of French households, nor indeed Europe’s finance chiefs, who recently warned France not to raise taxes.

According to a study by Europe 1 radio, as many as 20 million households in France will be hit in the pocket by a combination of tax changes.

Between a new tax bracket of 45 percent, cuts to family assessments and a freezing of the income tax scale, more than half the country’s tax payers will pay an average of €200 more this year.

The issue of tax, which is referred to by the French press as the “ras-le-bol fiscal” (tax malaise), is expected to dominate the news over the coming weeks as bills start landing in letter boxes across the country.

And according to Europe1, millions of tax payers in France could get a nasty shock when they open their envelopes. The site estimates that 20 million out of 36 million taxpayers will pay anything from €50 to €400 more than expected.

Even those who are not paying income tax will have been hit in the pocket by the government’s freeze in the “tax credit” (prime pour l’emploi) which is paid out to those on low incomes – around 6.3 million people in France.

Europe 1 notes that claims by Prime Minister Jean Marc-Ayrault following the announcement of tax rises in 2012, that nine out of ten people would not be affected by the tax increase, now seem “far-fetched”.

The creation of a new 45 percent tax bracket on annual earnings beyond €150,000, and the changes to wealth or fortune tax will impact on the country’s most wealthy as Ayrault had predicted but many other changes will affect a great swathe of the population.

According to government forecasts a move to lower the ceiling of the family assessment scale from €2,000 to €1,500 will hit 12 percent of households.

Story continues below…

Europe1 estimates the impact of that will mean a household with two children that earns a combined total of €6,000 a month will pay an extra €250 in taxes on their incomes.

The controversy over tax is likely to continue in the coming weeks and months, with the government expected to introduce further hikes. Just last week, France's environment minister talked of bringing in a new carbon tax.

The IMF also recently warned France to go easy on austerity and not to increase taxes. In 2014 tax earnings are set to represent 46 percent of the country’s GDP, a level not seen since the previous tax peak of 1999.

AFP/The Local (ben.mcpartland@thelocal.com)

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