The finance bill arrives in public session at the National Assembly. And the debates, on taxation in particular, promise to be heated in the hemicycle.
© AMAURY CORNUHans LucasHans Lucas via AFP
Serious things are beginning for the Barnier government. The “revenue” section of the State budget for 2025 will be scrutinized in a public session at the National Assembly starting this Monday, October 21 in the evening. After the rejection of the bill in the Finance Committee this weekend, the debates promise to be heated. Particularly in matters of taxation, while the executive plans a colossal budgetary effort to straighten out the public accounts: no less than 60 billion euros. And on the left as among the centrists, the deputies hope to make more contribution from the wealthiest French people, but not only. To the great dismay of the government.
As a reminder, parliamentarians are once again examining the initial version of the bill. That is to say, that established by the government and not amended by the Finance Committee which studied it last week. The left wing of the hemicycle therefore has a second chance to vote for the abolition of the single flat-rate levy (PFU), which the socialists consider to be “like a great gift to the rich”. Also known as flat taxthis single-rate tax was created in 2018, under the presidency of Emmanuel Macron, with the aim of reducing and simplifying the taxation of savings. It applies to capital income, such as interest, dividends and capital gains on financial investments (life insurance, bank accounts, PEL, etc.). This income is currently subject to an overall rate of 30% (12.8% flat-rate tax and 17.2% social security contributions).
Towards an increase in the flat tax on investments?
But the chances of voting for this measure remain slim. In the Finance Committee, all amendments in this direction were rejected, the parliamentarians having preferred a moderate increase in the overall PFU rate to 33%. In the event of failure, the New Popular Front will then defend more or less significant increases in the flat tax, in order to bring the overall rate to 33%, 35%, or even 40%. To do this, elected officials propose increasing the flat-rate income tax from 12.8% to 15.8%, 17.8%, or even 22.8%.
The tax advantages of life insurance for inheritance in the spotlight
A revolution for life insurance. This is what many MPs are proposing who are determined to put an end to the advantages of this tax package in terms of inheritance. In line with the elected Democrats, who had the Finance Committee adopt a amendment subjecting these contracts to inheritance tax when the payments were made before the subscriber reached the age of 70. As a reminder, if the sums are placed on life insurance before this age limit, a reduction of 152,500 euros benefits each of the designated beneficiaries, a more favorable scale than the inheritance tax then applying.
Flat tax: deputies vote to increase the rate to 33% in 2025
And other parliamentary groups intend to bring life insurance into line. Amendments from elected socialists, the Democratic and Republican Left, La France insoumise and the Ecologist and Social group not only plan to reintegrate thelife insurance inheritance tax but also to remove the reduction of 152,500 euros specific to this product.
The left wants to perpetuate the exceptional contribution of high incomes
The differential contribution of high incomes is also one of the hot points which will be debated by deputies this Monday evening. Included in the budget by the government itself, the measure targets households which are already subject to the exceptional contribution on high incomes (CEHR), that is to say single people with more than 250,000 euros of tax income. reference per year, or more than 500,000 euros for a couple. Among these individuals, those whose average tax rate does not reach 20% would be liable for said differential contribution in order to reach this threshold. Ultimately, only 24,300 tax households would be affected.
Problem is, this tax system would only be effective until 2026, the time, according to the government, to straighten out the public accounts. However, to provide more “fiscal justice”, the New Popular Front and certain Democratic deputies wish to perpetuate this differential contribution. Other left-wing elected officials also hope to increase the income tax guarantee threshold for the wealthiest households from 20 to 30%, or even 40%.
Towards an elimination of the increase in the electricity tax?
Another crucial point of the debates to come in the hemicycle: the increase, planned by the government, of the tax on electricity in order to put an end to the tariff shield introduced in 2022 in the midst of an inflationary crisis. While the government hopes to draw 3 billion euros in revenue from it, deputies from several political parties will try to remove it from the bill, as they succeeded in doing so during its examination in the Finance Committee.
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