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How much more disposable income will you have under the 2020 French budget?

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How much more disposable income will you have under the 2020 French budget?
How much spare cash will you have in your pocket next year under Macron's budget? Photo: AFP
15:24 CEST+02:00
With a variety of tax cuts, most people living in France will be better off under the 2020 budget - but how much your disposable income will go up by varies a lot between various groups.

The 2020 budget may be aimed at angry 'yellow vests' but analysis shows that the upper middle class are likely to be the biggest beneficiaries, while the wealthiest will make fewest gains.

France’s Institute of Public Policies (IPP) on Tuesday released a revealing summary report on the 300-page fiscal document that encompasses many of the economic and social measures announced by Emmanuel Macron in December 2018 during his National Consultation.

According to the group’s findings, French households’ disposable income will increase by €252 on average under the new budget, but these financial gains will be unevenly distributed across different sectors of society.

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The biggest winners will be the middle classes, from those earning €1,230/month - who fall into the country’s 25 percent of lowest earners - to France’s most affluent 10 percent (earning more than €3,059/month).

IPP estimates their disposable income will increase by almost 1.5 percent on average, but within this sizeable wage bracket it’s the upper middle classes who earn a median €2,711 per month that will see the biggest gains: €603 more in 2020.

By comparison, those who fall under a lower salary bracket of around €1,518 per month will have €206 more at their disposal next year.

PPI graph showing how France's 2020 budget affect disposable income for different salary brackets. 

The middle class will also benefit from the government’s €5 billion income tax cut as well as the new exemption from paying housing tax for 80 percent of the French population.

French households with monthly earnings of €2,320 will get to keep €437 next year as a result of income tax cuts whereas those bringing in €1,715 every month will gain €144 more in 2020.

PPI graph showing how income tax reductions will benefit workers in different salary brackets. 

The richest and the poorest, on opposite ends of the wage spectrum, will benefit the least from the 2020 budget according to IPP.

In the case of France’s lowest earners, their purchasing power will remain largely unchanged as they already didn’t have to pay housing tax nor were they subject to income tax.

As for the very wealthy, their purchasing power will only increase slightly by 2 percent in 2020 and not 6 percent as previously estimated. The richest 1 percent won’t be eligible for any income or housing tax exemption.

All these changes point to a clear rebalancing of the tax burden in French society, with households whose monthly income is between €1,350 and €2,530 a month awarded a higher increase in purchasing power than France’s wealthiest 20 percent.

Unfortunately, the poorest 20 percent of the country will only see its disposable income rise by 1 percent between 2018 and 2020, roughly the same percentage as for France’s biggest earners but quantitatively a world apart.
 

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