• France's news in English

Workers in France to pay no tax for 2017 but...

The Local · 17 Jun 2015, 11:55

Published: 17 Jun 2015 11:55 GMT+02:00

Facebook Twitter Google+ reddit
On paper it sounds fantastic - no income tax for a whole year. Especially in France where the tax man's appetite is notorious.
Budget Minister Christian Eckert confirmed on Wednesday that France's reshuffle of its taxing system would come into effect in January 2018, when the French would begin automatically paying income tax (impôts sur le revenue) at source rather than in the annual tax returns.
The move means France will soon handle income taxes similarly to most other developed nations, and that the French will no longer pay taxes the following year after the annual declaration.
That means no need to save up money throughout the year to ensure coverage for September's tax bill.
To ease the changeover Eckert announced on Wednesday that 2017 would be "white year" (année blanche) or a "lost year" as far as income taxes were concerned.
But unfortunately for tax payers it's not as fantastic as it all sounds. 
The current system will remain in place in 2016, when the French will pay for 2015 taxes, and in 2017, when the taxes for 2016 will be paid, but a switch will take place on the 1st of January 2018, when taxes will begin to be paid at source immediately.
While this might sound like a welcome relief for the wallet of the average French person, a closer look suggests that there's a lot more at play.
French economist Eric Heyer, from the French Economic Observatory, told The Local that most tax payers won't notice the change and many may actually end up paying more income tax.
"It's false to see this as a present for the worker. By the time January 2018 comes around, salaries will normally have gone up so in effect workers will pay more in taxes," said Heyer.
He explained the only thing that might happen is that companies might agree to pay out any bonuses and other forms of "variable income" in 2017, so that they are not taxed in 2018.
As soon as Eckert announced that 2017 would be an "année blanche", the government came in for strong criticism.
Leader of the centrist MoDem party François Bayrou, who supports taxes paid at source, was among the first to call out the government.
Calling it "a joke" and a deception, he told the iTele channel that the move would "only really impact a small number of people".
"The government wants to make it look like it's passing off a gift," he said, adding that the state needed the money for itself.
"France is the European country where the deficit is consistently the highest, the debt is increasing, and where the situation is critical," he added.
But economist Eric Heyer said it's a "false argument" to suggest the state will lose millions of euros in revenue.
Story continues below…
"The change will not lower tax receipts for the government," he said, adding that the "année blanche" was just "mechanical".
"On the contrary receipts should go up because salaries will go up.
President Francois Hollande, who promised to make the change as part of his 2012 election manifesto, and government spokesperson Stephane Le Foll have packaged the plan as something that would simplify the lives of tax payers and business owners.
However due to the fact that taxes in France are paid per household and depend on factors such as number of children and marriage, rather than being based on individual income, the annual declarations will not disappear even with the change. 
While income tax in France is generally worth around one month's wage, workers also pay other "social charges" (charges sociales/cotisations sociales) directly out of their salaries.
These charges, that pay for the country's welfare state, are worth around 18 percent of gross earnings.
Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
How life for expats in France has changed over the years
A market in Eymet, southwestern France. Photo: AFP

Foreigners in France explain how life has changed over the years.

London calling for Calais youths, but only a chosen few
Photo: AFP

Dozens of Calais minors are still hanging their hopes on help from the UK, but not all will be so lucky.

17 different ways to talk about sex in French
Photo: Helga Weber/Flickr

Fancy a quick run with the one-legged man?

Yikes! This is what a rat-infested French jail looks like
Photo: YouTube/France Bleu TV.

This video is not for sufferers of ratophobia (or musophobia as the condition is officially called).

France to allow Baby Jesus in Town Halls this Christmas
Photo: AFP

Mary, Joseph, and baby Jesus are safe to go on display again this year, it seems.

National Front posts locations of migrants in French town
The National Front courts controversy. Photo: AFP

"Local tax payers have a right to know," says local far-right party chief.

Paris thieves use tear gas to steal €500,000 of watches
Photo: AFP

The thieves pretended to be couriers then threatened staff with tear gas to get the watches.

Bataclan survivor recounts attack in chilling drawings
Photo: BFMTV screengrab

One survivor has recounted the horrific night through illustrations.

Anger among French police grows as Hollande vows talks
French police demonstrate on the Champs Elysées. Photo: AFP

A fourth night of protests shows government efforts to ease anger among French police have been fruitless.

UK border must move back, says 'next French president'
Photo: AFP

If favourite Alain Juppé is elected, Britain and France are in for some difficult negotiations.

Sponsored Article
How to vote absentee from abroad in the US elections
Why Toulouse is THE place to be in France right now
Sponsored Article
Last chance to vote absentee in the US elections
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Sponsored Article
How to vote absentee from abroad in the US elections
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
The ups and downs of being both French and English
How Brexit vote has changed life for expats in France
Twelve French insults we'd love to have in English
What's on in France: Ten of the best events in October
jobs available