After days of wavering and speculation that they would ditch the reform, the French government finally announced on Tuesday that from January 2019 workers will indeed have their income tax taken directly from their paychecks automatically.
The change will see most workers in France have their income tax automatically taken out of their wages each month by their employers, as is the case in most other European countries, rather than the current system which sees employees pay income tax the following year in installments.
The reform will affect some 38 million households in France.
The reform was first due to be implemented in January 2018 but was delayed a year because President Emmanuel Macron wanted time to make sure the reform was actually worth it and to smooth out any problems.
In recent days the reform looked as though it would be delayed or even scrapped as Macron grew wary of potential technical bugs as well as a negative reaction from taxpayers to a cut in their monthly payslips, which may hit consumer confidence.
But on Tuesday Prime Minister Edouard Philippe put an end to the suspense.
“The new system will not reduce the spending power of French workers but will improve their situation,” Philippe said.
“I guarantee that this reform will be implemented in the right way. We have done the work diligently, we have checked and rechecked. On January 1st, 2019, everything will be ready.
Testing of the new system apparently threw up enough mistakes to make the government wary of implementing the reform as soon as January, however both the Budget Minister Geramd Darmanin and the tax collectors themselves insisted everything was good to go.
“The errors identified concern less than 1 percent of taxpayers, they have since been resolved. The technical mechanism functions, it is ready,” said Darmanin.
Employers, especially bosses of small and medium companies had pleaded for the change to be dropped saying they don't have the resources to implement the major change.
But their wishes were ignored and France will finally fall inline with most of western Europe.
Emails have already been sen out to tax payers explaining to them why it's important they pay tax on monthly basis rather than a year later.
“This reform of tax modernization and simplification will not change the total amount of tax you pay,” Budget Minister Darmanin told tax payers in the email.
“This gap [of a year] is not adapted to all the changes of situation you can experience: periods of activity and inactivity, bonuses, marriage, civil unions, divorce, birth of children, loss of a spouse, retirement … Every year nearly seven million of you experience very significant declines or increases in income, read the letter signed by Budget Minister Darmanin.
So from January workers can expect to take a hit to their monthly wage although they will no longer have to worry about paying their income a year later.
Tax payers in France have already been sent their personal tax code, which they can change before September 15th.