In accordance with the commitment expressed in the keynote speeches on 8 April 2014, and after consultation with the Parliamentary majority, the Government has proposed a tax relief measure for the lowest income households as of 2014.
Over the last three years, households have been included in taxes even though their situation has not improved. The proposed measure will exclude 1.8 million low-income households from income tax. New income taxpayers will return to their "natural" rhythm for 2011-2014.
The measures taken over recent years, included those put in place by the previous majority (notably the end of the scale freeze and the gradual elimination of the half-part for single people having raised a child), have led to an increase in the number of tax households, beyond the natural progression (which is 400,000 per year). Just over 17 million tax households were subject to income tax in 2011. This number increased to 19 million in 2013, and will increase by a further one million in 2014.
Aware of the contributions demanded from all, and of their particular burden on those with the lowest incomes, the Government has decided to submit an income tax relief measure for the less well-off households to Parliament, which will come into force as of the 2013 income assessment, in autumn 2014.
This measure will take the form of a tax reduction of €350 for single people and €700 for couples, and will be automatically attributed to income tax owed by taxpayers. This tax reduction will be shown on the notices of assessment which will be received this autumn.
It will benefit tax households whose average tax revenue is lower than that of an employee remunerated at 1.1 times the minimum wage. This threshold condition is "familiarised": the income threshold giving entitlement to the measure is double for couples, and increased for each person connected to the tax household.
The measure will alleviate income tax for 3.2 million tax households, 1.8 million of which will remain or will become untaxed. It will therefore go well beyond a simple compensation for new income taxpayers due to the tax provisions implemented at the end of 2013. It will also correct the effects of tax decisions that adversely affect low-income households taken by the previous majority.
As part of the works on the 2015 finance bill, the Government will propose a sustained income tax relief measure for the most disadvantaged tax households.
This measure complements the measures taken in the 2014 finance law, which have made it possible to limit the contributions of low-income households (increase in tax relief for new income tax households and raising of the benchmark tax revenue which provides entitlement to exemptions or cuts in local taxes and social security contributions above inflation).
This tax relief for the lowest income households will be financed with respect for the balance of public finances, thanks to a higher than expected return on the regularisation measures for overseas assets held by some French nationals.
At a time when everyone has to contribute, the Government is more determined than ever to ensure everyone pays what they owe. France acts as the driving force in the progress towards the automatic exchange of information between countries on bank assets and has strengthened its legislative arsenal to combat fraud. It is in the interest of all taxpayers with undeclared assets abroad, most often with no intent to defraud, to regularise their situation with the tax administration.
Excerpts from the Council of Ministers