French taxes: Who will benefit from Macron's '€2 billion tax cuts for the middle class'?
In a TV interview on Monday night, French president Emmanuel Macron promised €2 billion in tax cuts for middle earners in France - here's what we know about the cuts, and who will benefit from them.
As part of a wide ranging interview on TV channel TF1 on Monday night - during which he also announced that France would begin training fighter pilots for Ukraine - Macron promised €2 billion in tax cuts for middle earners by the end of his presidential term in 2027.
He had previously said that he wanted to help those people who are, "too rich to be helped [ie do not qualify for benefits or government financial aid] but not rich enough to live well".
With the caveat that this was a typical Macron flourish with not a lot of detail behind it, here's what we know about the tax cuts and who will benefit.
Already in place
Macron was referring to cuts that take place during this quinquennat - ie his current five-year term which runs until 2027.
Some cuts are already in place - the most noticeable being the abolition of the TV licence and end to taxe d'habitation.
The taxe d'habitation - household tax - has been gradually being scaled back since 2018. It began with the lowest earners and continued with year-on-year cuts so that people either paid a lower amount or didn't pay at all.
By the 2023 tax year, no-one will pay it on their main home (second-homes will continue to be charged).
The actual tax itself varies according to the size of your home and household, but the average bill before 2018 was €300 a year.
In 2022 the TV licence was scrapped for everyone, saving households €138 a year.
Income tax levels have also seen a cut from 2019, with households in the first tax bracket (earning between €9,965 and €25,405 a year) benefiting from an average €350 tax cut per year. People on incomes lower than €9,965 do not pay income tax.
New cuts
In addition to these, there will also be new savings for the middle class, Macron promised.
It's fair to say that Monday's announcement was light on detail - he said: "I have asked the government to work on this, but I don't want to close any doors here because there may be intelligent things to do on part of the social charges you pay or the contributions you pay when you are an employee."
The finance ministry is now tasked with a more detailed plan, which will be presented to Macron "in the coming weeks".
Unlike the TV licence and taxe d'habitation cuts, it seems that these cuts will be targeted at specific tax brackets.
They also appear to be focused on the deductions that come out of your pay packet - which means that they are targeted at those in work (whether employees or self-employed) rather than pensioners, students or the unemployed.
Further cuts to income tax have not been ruled out, but in fact if you look at the deductions taken from your pay, income tax (impôts) only makes up a small part - the biggest share goes in prélèvements sociaux (social charges) and cotisations (contributions to things like unemployment insurance and pensions). Macron specifically mentioned these two things as areas to be explored.
READ ALSO How to understand your French payslip
Who benefits?
One thing is clear: these tax cuts will be specifically targeted at the middle class, the theory being that there is already financial aid in place for lower earners, but inflation has particularly impacted people who earn too much to qualify for state aid such as top-up benefits or grants like the chèque energie or €100 contribution towards fuel costs.
From the nature of the cuts being discussed, it seems likely that they will also be targeted at people who are in work - both salaried employees and the self-employed who pay their social contributions via URSSAF.
The president provided no details on who counts as 'the middle class', which is, after all, a fairly broad definition.
Off-the-record briefings to French media after his speech suggest that, initially at least, tax cuts will be targeted at the lowest earners within the middle class - beginning with that €9,965 and €25,405 a year income bracket (or between €1,500 and €2,500 net a month) who have already benefited from an income tax cut.
That represents around 12 million people - or almost half of the working population.
The average wage in France is €2,524 (net) per month, which works out at a pre-tax salary of €39,000 a year.
Within the French workforce, 19.5 percent earn less than €1,500 a month after tax, 30.2 percent earn between €1,500 and €2,000 and 18.6 percent earn between €2,000 and €2,500.
The €2,500 to €3,000 wage bracket accounts for 10.2 percent of the population; and then only 18 percent of the working population are covered by the higher wage brackets of €3,000 to €8,000 and the €8,000-plus a month category.
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As part of a wide ranging interview on TV channel TF1 on Monday night - during which he also announced that France would begin training fighter pilots for Ukraine - Macron promised €2 billion in tax cuts for middle earners by the end of his presidential term in 2027.
He had previously said that he wanted to help those people who are, "too rich to be helped [ie do not qualify for benefits or government financial aid] but not rich enough to live well".
With the caveat that this was a typical Macron flourish with not a lot of detail behind it, here's what we know about the tax cuts and who will benefit.
Already in place
Macron was referring to cuts that take place during this quinquennat - ie his current five-year term which runs until 2027.
Some cuts are already in place - the most noticeable being the abolition of the TV licence and end to taxe d'habitation.
The taxe d'habitation - household tax - has been gradually being scaled back since 2018. It began with the lowest earners and continued with year-on-year cuts so that people either paid a lower amount or didn't pay at all.
By the 2023 tax year, no-one will pay it on their main home (second-homes will continue to be charged).
The actual tax itself varies according to the size of your home and household, but the average bill before 2018 was €300 a year.
In 2022 the TV licence was scrapped for everyone, saving households €138 a year.
Income tax levels have also seen a cut from 2019, with households in the first tax bracket (earning between €9,965 and €25,405 a year) benefiting from an average €350 tax cut per year. People on incomes lower than €9,965 do not pay income tax.
New cuts
In addition to these, there will also be new savings for the middle class, Macron promised.
It's fair to say that Monday's announcement was light on detail - he said: "I have asked the government to work on this, but I don't want to close any doors here because there may be intelligent things to do on part of the social charges you pay or the contributions you pay when you are an employee."
The finance ministry is now tasked with a more detailed plan, which will be presented to Macron "in the coming weeks".
Unlike the TV licence and taxe d'habitation cuts, it seems that these cuts will be targeted at specific tax brackets.
They also appear to be focused on the deductions that come out of your pay packet - which means that they are targeted at those in work (whether employees or self-employed) rather than pensioners, students or the unemployed.
Further cuts to income tax have not been ruled out, but in fact if you look at the deductions taken from your pay, income tax (impôts) only makes up a small part - the biggest share goes in prélèvements sociaux (social charges) and cotisations (contributions to things like unemployment insurance and pensions). Macron specifically mentioned these two things as areas to be explored.
READ ALSO How to understand your French payslip
Who benefits?
One thing is clear: these tax cuts will be specifically targeted at the middle class, the theory being that there is already financial aid in place for lower earners, but inflation has particularly impacted people who earn too much to qualify for state aid such as top-up benefits or grants like the chèque energie or €100 contribution towards fuel costs.
From the nature of the cuts being discussed, it seems likely that they will also be targeted at people who are in work - both salaried employees and the self-employed who pay their social contributions via URSSAF.
The president provided no details on who counts as 'the middle class', which is, after all, a fairly broad definition.
Off-the-record briefings to French media after his speech suggest that, initially at least, tax cuts will be targeted at the lowest earners within the middle class - beginning with that €9,965 and €25,405 a year income bracket (or between €1,500 and €2,500 net a month) who have already benefited from an income tax cut.
That represents around 12 million people - or almost half of the working population.
The average wage in France is €2,524 (net) per month, which works out at a pre-tax salary of €39,000 a year.
Within the French workforce, 19.5 percent earn less than €1,500 a month after tax, 30.2 percent earn between €1,500 and €2,000 and 18.6 percent earn between €2,000 and €2,500.
The €2,500 to €3,000 wage bracket accounts for 10.2 percent of the population; and then only 18 percent of the working population are covered by the higher wage brackets of €3,000 to €8,000 and the €8,000-plus a month category.
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