Income tax: the Court of Auditors wants to reduce these tax advantages

The Court of Auditors wants to reduce certain tax aid boosted in response to the health crisis. In particular, she calls for reducing benefits for childcare and the mileage scale, mechanisms that she considers poorly calibrated.

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If the government is still discussing with the different political parties with a view to establishing the next budget for 2025the position of the Court of Auditors is already known. And the institution, responsible for controlling the use of public funds, does not beat around the bush: “In its latest report on the overall situation of public finances, published in July 2024, the Court of Auditors described it as worrying. She is worrying today”she specifies in the introduction to her report made public this Thursday, January 9.

So now is the time to save money. And, the Wise Men, in their “contribution to the review of public expenditure with a view to the 2025 and 2026 finance bills”, have identified many of them. Among other things, they recommend scaling back certain boosted tax measures to deal with the surge in energy prices and inflation since 2020. “Presented as responses limited in time, several of these measures continue to weigh on the State budget, while the crises which justified them have generally been resolved”thus points out the Court.

Brake on the mileage scale

Among the measures that the institution calls for rationalization, the mileage scale. A mechanism used by taxpayers who choose the deduction of actual expenses for their tax return, in place of theflat rate reduction of 10%in order to better take into account their business travel costs, including home-work journeys. This scale having been revalued by 10% in 2022, then by 5.4% in 2023, “the level of the scale reached in 2024 thus recorded an increase of almost 16% compared to 2021, which exceeds the effects of that of the price of fuel over the same periodpoint out the Sages. Furthermore, studies on the cost of using vehicles show that the tax scale set in 2022, therefore after the 10% increase, exceeds the actual cost of use by 47 to 121%..

For the Court, the increases of the past are no longer justified at all, especially since they benefit the wealthiest households and the consumption of fossil fuels, “against the objectives of decarbonization and social justice”. Reasons which push it to propose a reduction of 14% in the mileage scale in 2025, i.e. at its 2021 level, for a gain of 530 million euros in 2025, 660 million euros in 2026 and 400 million euros of additional income tax at cruising speed, from 2027.

The ceiling for the childcare tax credit reduced by 500 euros

Another tax expenditure in the sights of the Court of Auditors, the tax credit for child care expenses under six years old outside the home. A tax advantage which allows parents to obtain a tax reduction corresponds to 50% of their expenses, expenses currently capped at 3,500 euros. Or a maximum tax credit of 1,750 euros per child. An amount significantly increased since January 1, 2023, since it was limited to 2,300 euros previously. “This tax credit has, therefore, seen its cost increase by 274 million euros (+22%) between 2022 and 2023 and by 110 million euros (+6.7%) in 2024 to reach 1.72 billion euros”points out the Court.

However, between 2020 and 2023, the price of childminders has only increased by 5.3% on average. Reason why the Wise Men recommend reducing the ceiling of expenses eligible for the tax credit to 2,500 euros, an amount up 8.7% compared to 2021, “which is equivalent to the increase in the hourly rate of childminders between 2018 and 2023”. With 200 million euros in additional tax revenue for the state coffers. For the taxpayers concerned, the tax advantage would thus be limited to 1,250 euros, or 500 euros less than currently.