Mayors worried over local tax cuts

Taxe d'habitation changes raise finance issues

20 December 2017

Mayors remain worried that their budgets will suffer due to plans to exempt 80% of the population from one of the two main local taxes, the taxe d’habitation, by 2020.

This year, for those who qualify, the bill will be reduced by 30%, next year by 65% – and then by 100% in and after 2020.

A spokesman for the Association des Maires de France says mayors remain very concerned about the loss of one of their main sources of income.

“The president has insisted that the state is obliged to compensate, but the worry is will the loss to local budgets really be totally compensated,” he said.

The state-owned news media France Info claims to have seen a simulation by the senate’s finance commission and that it shows some communes will see almost all homes exempt.

Sallaumines in Pas-de-Calais, for example, would see 97% of homes exempt by 2020, a potential loss of a million euros out of a budget of 11 million.

The mayor of the town, which has a population of 10,000, says he fears they may not be able to finance more expensive projects such as works for a new bus line because, he says, the president has failed to explain in detail how compensation will work.

Mr Macron told a recent mayors’ conference the tax is ‘unfair’ because it is not linked to earnings. “Someone can earn twice the minimum wage or five times and pay the same for the same surface area,” he said, adding the tax weighs heavily on the middle classes as many low earners already benefit from reductions.

He faced whistles of disapproval but said “whistles have never really bothered me”.

Who will be affected?
The exemption will apply only to main homes and is in addition to existing reductions and exemptions based on age, means and disability.

The reductions will be based on residents’ revenu fiscal de référence (net taxable income) for the year 2016, with ceilings set at:
€27,000 for single people,
€43,000 for childless couples,
€49,000 for couples with one child or €55,000 for two children.

A mechanism is also planned allowing for lesser reductions for those with incomes just above the ceilings.

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