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Taxman targets your savings

Tax breaks will be cut and social charges raised in a bid to reduce the public deficit

LIVING in France will become more expensive as the government looks to raise social charges and taxes, and cut tax-free opportunities.

Residents in France will see their healthcare bills rise and some savings taxed, while other tax breaks for activities such as buying an environmentally friendly car or insulating your home will be reduced or scrapped. Shares are also targeted.

The extra charges follow a series of increases in gas and electricity prices.

Mary Hughes, of charity Elizabeth Finn Care, which helps British and Irish expatriates in France, said: “It does have a big impact on people because many are living on a fixed income. A lot of people can’t afford top-up healthcare.”

Inquiries to the charity have been increasing in recent months.

“It used to be mainly elderly people, but now we have people who have been working: builders and property developers who found it hard since the market slowed down, business people who have paid their French taxes are having problems.”

Finance minister François Baroin has ruled out a rise in income tax until after the presidential elections in 2012.

Meanwhile the government plans to raise more money indirectly by cutting tax breaks (niches fiscales) to reduce its national debt to €100 billion next year, compared to €152 billion estimated in 2010.

It has already climbed down on proposals to scrap the tax-free status of donations to charity, cutting help for student accommodation and tax breaks for home help.

Local taxation is also set to rise, although not to the extremes of Autun in the Saône-et-Loire, whose residents saw their taxe foncière bills up more than 3,000 per cent as the mairie sought to force them to sell their land to free it for cheaper housing.

Taxe foncière bills, which arrive this month, are up on average 3.8 per cent, well above inflation, with some authorities asking for eight per cent more. Reorganisation of local taxes (see page 9) could lead to further rises in 2011.

Certain assurance vie savings policies, currently spared from social charges until they are wound up, could see charges levied on them.

While the plans to cut the state reimbursements for a visit to the doctor, certain operations and procedures and drugs for minor ailments, involve relatively small changes to personal budgets, health insurance companies have threatened to raise the prices of their policies (mutuelles) by up to 10 per cent to cover their costs.

Environmentally friendly tax-breaks, allowing home-owners to write off some costs involved in green home improvements, are to be cut or scrapped, and the terms of the government’s “bonus-malus” scheme to encourage the purchase of low-emission cars will be made stricter.

Buying a home will become more expensive unless you are a first-time buyer: the government is scrapping the tax break for mortgage interest payments and the replacement interest-free property loan will be only for those buying their first home.

TV, internet and phone providers have said they will raise prices if the government increases VAT on their “triple-play” offers from 5.5 per cent to 19.6 per cent.

The tax benefits for newly weds are to be scrapped, but the government has no plans to remove the bouclier fiscal, which limits the amount of tax paid by a person to 50 per cent. Last year, the cap saw €679m of tax refunded.

The changes are part of the 2011 Finance Law, which will be debated and amended in both the National Assembly and the Senate.

For money tips see “Living with the low pound” in the money section of our website.

Call Mary Hughes 04 68 23 43 79

Possible changes

Certain assurance vie tax free savings could be subject to social charges

Health insurers vow to put up prices, as government says it will cut back on reimbursements for doctor’s visits and certain drugs and hospital procedures

Local taxes up higher than inflation: a shake-up in organisation could mean bigger rises in 2011

Rise in income tax ruled out until after presidential election in 2012

VAT on broadband triple play will push up prices of combined internet, phone and TV deals

Tax breaks for green home improvements like insulation to be cut back

Stricter rules for buying a low-emission car

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