Which taxes were eliminated or reduced under Macron’s presidency?

Prime Minister Michel Barnier assesses the country’s budget situation “very serious”and did not rule out the possibility of raising taxes. A taboo for Macronists, while Emmanuel Macron’s two five-year terms were marked by tax reductions or eliminations. The outgoing Finance Minister, Bruno Le Maire, also claimed, in his farewell speech at Bercy, to have succeeded “55 billion euros in tax cuts.” In a report published in July, the Court of Auditors estimates that tax cuts since 2018 have contributed to the deterioration the public deficit: “The impact is estimated at 62 billion euros in 2023.”

In detail, tax cuts or eliminations tended to benefit the richest or businesses, and most households had to settle for some measures in favor of purchasing power.

Transformation of the solidarity tax on wealth into a tax on real estate wealth

Since when? Emmanuel Macron’s campaign promise to abolish the solidarity tax on wealth (ISF) and replace it with the real estate tax (IFI) was implemented in 2018.

Who is affected? The IFI refers to households that own real estate assets whose net value (the difference between the value of the property and possible loans) is greater than 1.3 million euros as of 1^Ahem January of the fiscal year. This measure benefits the richest because it excludes securities and investments from the tax calculation. The aim of the reform was to support private investment and the growth of the French economy.

What deficit? A report by France Stratégie 2023 estimates that, if the ISF had been maintained, its income “In 2022, it would have been equal to 6.3 billion euros.” The IFIs contributed 1.83 billion that year, “the loss of income linked [au] replacement [de l’ISF] by the IFIs would therefore have been equivalent to 4.5 billion euros “, according to France Stratégie.

Transformation of capital income taxation into a “single tax”

Since when? In addition to the abolition of the ISF, the 2018 finance law introduced a single flat rate (PFU) of 30%, known as the “single tax”. », for savings income: income from movable capital, dividends, property income, etc.

Who is affected? The aim is to simplify and reduce the taxation of savings in order to make the tax system more attractive, especially for the richest. The PFU replaces the taxation of capital gains in the income tax scale. The previous system, sometimes perceived as complex and dissuasive, resulted in progressive taxation, which could reach 60% for the richest taxpayers, compared to 30% regardless of the amount declared under the “flat tax”.

What deficit? The implementation of the PFU in 2018 represents a cost of 1.8 billion euros for the State, according to the economic, social and financial report attached to the 2022 finance bill.

Reduction of the corporate tax rate

Since when? The 2018 Finance Act also provided for a gradual reduction in the corporate tax rate from 33.3% in 2017 to 25% in 2022, while maintaining the reduced rate of 15% for small and medium-sized enterprises (SMEs).

Who is affected? The corporate tax (IS), also known as the “corporate profits tax”, is levied on the profits of French companies. The reform was intended to support private investment and economic growth.

What deficit? The preliminary assessment of the finance law regarding the reduction of the IS rate maintained a budgetary cost of 11.1 billion eurosThe poor financial results of taxed companies and the fall in the tax rate also had an impact on tax revenues: from 71 billion euros in 2021, they fell to 68 billion in 2022, a decrease of 4% according to figures from the Department of Fiscal Studies and Statistics.

Reform of the “exit tax”

Since when? In 2018, the “exit tax” was not abolished, as Emmanuel Macron first announced, but revised in the form of a more targeted mechanism so as not to discourage investors.

Who is affected? “ The exit tax is a system that targets business leaders tempted by tax exile. Created in 2011, under the presidency of Nicolas Sarkozy, its aim is to fight tax evasion by taxing 30% of the theoretical or latent capital gains made by French people who owned shares in companies (stocks, bonds, etc.) at the time. they move their tax residence outside the country. If they sell their shares within fifteen years of moving abroad, they will have to pay taxes. on 1^Ahem January 2019, the finance law. reduced the holding period for shares after exit to two years (after which there is exemption from the “exit tax”).

What deficit? Between 2012 and 2017, it cost the State 138 million euros and affected fewer than 400 people a year on average, according to Bercy. Although it is difficult to know the income from the “exit tax”, we can consider that the reduction of the period implies a reduction in the returns of this tax for the State. In 2022, the National Assembly also voted in favour of restoring the “exit tax” in its initial version., reducing the term to fifteen years, against the advice of the government. According to the Montaigne Institute, a liberal think tank, this recovery could generate up to 67 million euros a year.

Elimination of housing tax for primary residences

Since when? The abolition of this tax for the main residence was initiated by the 2018 finance law, first for the most modest households, before being gradually generalized to all households on 1^Ahem January 2023.

Who is affected? The housing tax is levied on every taxable household with real estate, whether it is a tenant or a homeowner. This tax, which has been abolished for primary residences, is nevertheless maintained for secondary residences of owners or usufructuaries of furnished premises and their outbuildings. This was one of the commitments of the President of the Republic to support the purchasing power of households by reducing mandatory deductions.

What deficit? For local authorities, the housing tax represented 23.4 billion in revenue in 2016. But the state is committed to making up for the loss. The abolition is usually compensated by an allocation of value-added tax (VAT) revenues to local authorities. The continuation of the housing tax reform has therefore further strained the state budget due to the loss of revenue. 2.8 billion euros in 2023, according to the Court of Auditors report of April 2024.

Elimination of the contribution to public broadcasting

Since when? The abolition of the housing tax meant the end of the contribution to public broadcasting (CAP) in 2022. In fact, the recovery of the CAP was supported by the housing tax.

Who is affected? The CAP, formerly known as the audiovisual tax, is a tax linked to the ownership of a television set. It finances public broadcasting companies such as France Télévisions and Radio France. Its elimination was also part of measures to boost household purchasing power.

What deficit? According to the report prepared jointly by the General Inspectorate of Finance and the General Inspectorate of Cultural Affairs, the CAP accounted for 89% of the funding of public broadcasting and had reported 3.1 billion euros in 2020.

Abolished since 2022, it was to be followed by a reform of the financing of public broadcasting that has not yet been voted on. The temporary solution found by the government to compensate for the loss is the allocation of a fraction of VAT until the end of 2024. And then? For the moment, the debate on the draft reform is postponed.

Elimination of the contribution on the added value of companies

Since when? The rate of this tax has already been halved in 2023 and should decrease progressively (by a quarter each year) until 2027, when it is completely abolished.

Who is affected? Depending on the added value produced during the reference period, the contribution on the added value of companies (CVAE) must be paid by companies that generate a certain turnover and whose activity is subject to the tax on commercial real estate. The aim of its elimination is to continue the reduction of taxes on production.

What deficit? The CVAE had contributed 9.6 billion euros to local authorities in 2021, and 9.3 billion in 2022, the last year at full rate, compared to 15 billion in 2020.

Since 1^Ahem As of January 2023, the CVAE proceeds are received by the State and no longer by local authorities. To compensate for the loss of this transfer, a fraction of the VAT is remobilized. The loss therefore amounts to approximately 5 billion euros for the State in 2023 (the year in which the rate had already been halved), based on the income assessment for 2024.