The government says the cut (including some measures that were already expected) is unprecedented for 10 years, but it was questioned by OFCE, whose analysis factored in other items not included in the draft 2019 Finance Law.
Some measures might still be tweaked or removed during parliamentary debates before the law is finalised in December.
The good news for people’s budgets includes:
- Confirmation of another lowering of taxe d’habitation for 80% of households, amounting to 65% off the normal bill in 2019.
- Employers’ social charges will be annulled on overtime hours from September 2019, meaning workers end up with more in their pocket (extra €200/year for people on the minimum wage).
- From January 15, those who usually obtain an income tax credit for paying for services in the home will be given an advance, representing 60% of the previous year’s tax credit, as a cash-flow boost. This will also extend to several other kinds of tax credit, including those relating to certain types of letting or giving to charity.
- Some benefits will increase by more than usual, notably the Aspa pension top-up for pensioners on a low income, which will rise from a maximum €833/month for a single person to €868 on January 1, and the disability benefit AAH will rise from €860 to €900 at the end of the year. The prime d’activité, for workers on low incomes is also set for an unspecified increase.
- Some 300,000 households which were affected by this year’s rise in the CSG social charge on pensions because their pension income was slightly above the threshold of €14,404 for a single person or €22,051 for a couple will in 2019 not be concerned by this, as a “goodwill gesture”.
The bad news includes:
- Tax credits for eco-friendly home improvements such as insulation will be lowered.
- Housing benefit (aide personnalisée au logement), family allowance and French state pensions will increase in 2019 but by a lesser amount than usual and by less than inflation.
- Tax on diesel is to increase by 6.5 centimes per litre, and tax on petrol by 2.9 centimes.
- Fonctionnaires will have their basic salary frozen in 2019 (though rises linked to length of service will remain).
- Workers’ cotisations towards the complementary part of pensions are to increase linked to the fusion of the Agirc and Arrco regimes (this was due to a decision made by the last government).
Looking ahead, some help for parents of young children has been announced. The government says from 2020 it will maintain the complément de mode de garde (which helps pay for childcare) at its full rate until the child starts school, unlike now where it is halved after the child turns three.