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Here's how the new French income tax cuts will affect YOU

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Here's how the new French income tax cuts will affect YOU
Here's how the French tax cuts will affect you. File photo: AFP
13:24 CEST+02:00
When French Prime Minister Edouard Philippe laid out the government's agenda for 'Act II' of the current presidential term, he made it clear tax cuts were a priority. Here's a look at what the reform to income tax means for you.
Philippe said that the government had received the message that the French are suffering from tax fatigue – one of the messages of the anti-government Gilets Jaunes movement – "loud and clear". 
 
In practice this means that income tax will drop by €5 billion as part of a reform specifically aimed at improving the financial situation of "the working middle class".
 
The tax cuts are set to come into effect on January 1st 2020 after being voted through as part of the 2020 finance bill.
 
That means that in January 2020, 12 million households in France will be affected by a decrease in income tax from 14 percent to 11 percent that will see an average annual gain of €350 euros. Meanwhile the five million households included in the second drop – who already pay less tax – will benefit from an average annual gain of €180.
 
Here's a look at who will be included in the reforms – and by how much their bills will be cut.
 
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From tax cuts to plastics ban: French PM reveals list of reforms for 'Act II' of Macron's presidencyFrench Prime Minister Edouard Philippe laid out the plans on Wednesday. Photo: AFP

The good news is that eventually virtually everyone will benefit from the cuts. 
 
Once the reform is complete, of the 17 million households that pay income tax in France, 16.8 million will see their bills slashed by an average of €304. 
 
Taxpayers will naturally see their bills drop by varying amounts depending on the income tax bracket they fall into, as well as their personal circumstances, such as whether they are single or married, and whether or not they have children.
 
The Ministry of the Economy and Finance has created a list of examples, exclusively revealed by Le Parisien, to show the kind of cuts people can expect. 
 
Couples without children
 
Couples without dependent children are among the big winners of the reform.
 
For couples who have a joint monthly income of €4,600, the drop in their annual tax bill will be €892, representing a drop of 21.4 percent. So, instead of handing over €4,165 to the French taxman at the end of the year, they will pay €3,273. 
 
For couples with a monthly income of €3,000, the drop will be €151 euros (-17.4 percent).
 
Individuals without children and single parents
 
The annual gain for single people earning €2,000 per month with no dependent children will be €541, which represents a decrease of 33.2 percent in their tax bill. 
 
Those with a monthly income of €3,000 will see their income tax drop by €125.
 
Meanwhile a single parent raising a child and earning €2,600 per month will benefit from a drop of 29.7 percent.
 
Their income tax will drop from €758 to €533, a total of €225.
 
Those with a net income of €3,600 per month, will see their income tax bill drop by 21.4 percent, or €568 euros less over the year. For those who earn €4,600 euros per month, the drop will be €125.
 
Why Macron is fretting over the big change to how the French pay income taxPhoto: AFP
 
In his speech on Wednesday, the prime minister highlighted that the government would look to improve the lives of single parent families after the issue was frequently raised during the course of the "Grand Debat" – Macron's answer to the 'yellow vest' protests. 
 
In addition to the tax cuts, Philippe announced the creation of a "single family information service" in 2020, which will enable parents to "know in real time the availability of crèches and childminders available".
 
He also said that from June 2020, there would be a "new system to protect single people against the risk of unpaid child support payments." 
 
Couples with two children
 
A couple earning a joint salary of €4,600 per month with two children will see their income tax decrease from €2,770 to €1,885 euros, representing a decrease of 31.9 percent (€885).
 
Meanwhile couples with an income of €4,000 per month, will gain €181 euros after the reforms.
 
Retired couples
 
For retired couples with a monthly income of €4,600 will drop by 21.4 percent, making an annual gain of €892, while couples with an income of €3,000 will see their tax bill cut by 17.4 percent, meaning an annual saving of €151. 
 
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