Home help saved in tax break review

THE FRENCH government is missing out on €50bn a year in revenue because of tax breaks that are "inefficient" or have "little effect", a new report has found.

The report by the finance watchdog, l'Inspection des Finances, found one in five tax breaks (niches fiscales) were not worth keeping.

The most costly tax breaks included those for individuals who employ home help, rebates for pensioners and reduced tax rates in Corsica and the overseas territories.

The report indicated that tax breaks for the overseas territories cost €4.7bn and rebates for pensioners cost €2.7bn.

Tax breaks for individuals hiring a nanny or a tutor are estimated to cost the state €6bn per year. Despite this, budget minister Valérie Pécresse said: "The tax break for employment in the home affects hundreds of thousands of jobs. We will not be ending it."

She also reassured pensioners that the 10% tax rebate on pensions would not be affected, saying that home help and pensions affected "the most fragile" and would be protected.

Marie-Béatrice Levaux, president of Fepem (the federation of individual employers in France), said: "I'm still very concerned. Even though I respect Ms Pécresse's speedy intervention, I think that once again, we're playing with fire."

She added that uncertainty last year over the future of tax breaks for home employers has already led to a drop in people hiring at home. "It has already cost 8,000 jobs in the first quarter."

Ms Levaux says that for many working couples, home help is the only way they can both continue to work.

Busy couples have found childcare to be a workable solution. This is also the case for young mothers going back to work after their pregnancy who decide to hire a cleaner for a couple of hours.

"Our sector is characterised by a large number of workers on part-time, temporary contracts. We can't change the rules all the time. The uncertainty is impossible."