French Ministry of Economy building

The 2019 Finance Bill

Presented at the meeting of the Council of Ministers held on 24 September 2018, the 2019 Finance Bill continues with transformation of the French social model and promises 6 billion euros in tax cuts for households.
 

WHAT DOES THIS INVOLVE?


Major tax cuts for households

Tax cuts for households will be even bigger in 2019 than in 2018. All households will be concerned.

Tax cuts in 2018 have been to the tune of 2 billion euros for households. In 2019, they will be increased, with 6 billion euros involved, including:
  • A continued decrease in the residence tax (taxe d’habitation)
  • The full-year effect of exemption from employees’ Social Security payments (abolished in October 2018)
  • A decrease in the general social contribution (CSG - contribution sociale généralisée) for less well-off retirees
  • Exemption from employee contributions on overtime
For the 10% least well-off French citizens, all the fiscal measures adopted by the Government, even including tax increases on fuels and tobacco, will result in an average gain in purchasing power of over 2%, not to speak of the increases in minimum allowances (minima sociaux) and aids to households for their energy consumption (energy cheques, conversion bonuses, etc.).

The Government is continuing to do what it said it would. Taxes will be going down permanently by over 20 billion euros over the course of the President of the Republic’s five-year term, with several levers brought into play.


Priority given to work

The tax cuts are in line with a rationale that the Government has adopted and which is faithful to its campaign announcements on all points: priority to work. Work must pay, and a number of measures have been taken in this regard, including:
  • Abolition of various employee contributions that only affect employees, transferring them to the CSG, which applies to all forms of income, including capital income and pensions.
  • Tax exemption for incentive bonuses and profit-sharing schemes in SMEs for employees, so that everybody benefits from profits made.
  • Exemption, next year, of overtime, mainly to the advantage of blue-collar workers and white-collar employees, the population sectors most concerned by overtime.
  • An increase in the employment bonus (prime d’activité) to encourage return to work.

Tax increases on behaviour harmful to health or the environment.

In addition, although taxes in general are going down, the Government is also set on increasing taxes on behaviour harmful to health or the environment.
  • The increase in tax on fuels and convergence of diesel and petrol may be an unpopular measure, but it is the right one in a country which sees 48,000 premature deaths a year connected with air pollution. Taxes cannot do it all, whence the vehicle-conversion incentive we have introduced, but they help put us on the right path.
  • The tax increase on tobacco may be an unpopular measure, but it is the right one in a country which sees 73,000 deaths a year attributable to tobacco. Tobacco consumption has fallen significantly this year (-10%), by a percentage unprecedented since Jacques Chirac’s Cancer Plan (2003). Here again, taxes cannot do it all, whence, for example, the Government’s decision to reimburse smoking cessation treatments, but they help put us on the right path.
All in all, taxes are going down, and going down for maximum numbers of French citizens.
WHY?


Presented at the meeting of the Council of Ministers held on 24 September 2018, the Finance Bill continues on the course set by President of the Republic, establishing clear priorities on employment, education, the ecological transition and work.

A budget organised around 4 priorities

  1. Lowering compulsory deductions for all French citizens. Over 6 billion euros will be restored to households next year, in particular through abolition of the second instalment of the residence tax for 80% of taxpayers, the full effect of the reduction in unemployment and health insurance contributions, and exemption of overtime from Social Security payments as from September 2019.
     
  2. Promoting work and improving our companies’ attractiveness. In 2019, 2.5 billion euros will be invested in skills in order to tackle the root causes of unemployment. Work will be promoted by a 20-euro increase in the employment bonus, bringing it up to minimum wage (SMIC) level. Companies will benefit from transformation of the tax credit for employment and competitiveness (CICE – Crédit d'impôt compétitivité emploi) via long-term reduction of charges, continued cuts in corporate tax, and a tax system simplified by abolition of some twenty small taxes.
     
  3. Protecting French citizens. Protecting them socially: for the less well-off, the minimum pension and disabled adult allowance will be revised upwards, and the measures announced by the President of the Republic with regard to the strategy on preventing and combating poverty will be funded. Protecting them physically: resources assigned to the armed forces, justice system and Ministry of the Interior will be significantly increased.
     
  4. Preparing for the future. There will be major budgetary focus on education, research and the ecological transition, as well as through the Government’s "Grand Investment Plan". In-depth transformation of public action will be speeded up in 2019 with reform of the public audiovisual service, a new public employment service, and review of the State’s employees and operators, as well as of its presence abroad.

Transformation of the social model

The 2018 budget also continues transformation of our social model by building what the President of the Republic calls "the 21st-century Welfare State". The aim? To get the social ladder up and climbable again in our country, and to switch from a rationale of rights set forth on paper to one of genuine solidarity.

Among other things, the 2019 budget will mark the launch of the Poverty Plan and the Health Plan, whose aims are recognised by all associations, along with major upward revaluation of Social Security benefits intended for our most fragile citizens (the minimum pension and disabled adult allowance in particular).

A controlled budget

The Government has no intention of shaving public expenditure and employment in order to finance its priorities. Instead, it is proceeding by redeployments (including a decrease in housing budgets and subsidised jobs), transformation of public action and moderation of various social security benefits, including retirement pensions, which will rise less than inflation.

A real effort is asked of retirees, but it will free up resources to invest in hospitals, schools, the police, the justice system and national defence, and to ensure that work pays better.