Income tax may be set for big change

INCOME tax could be taken off “at source” direct from people’s pay packets as one of the reforms being looked at in the rethink of the French tax system.

Prime Minister Jean-Marc Ayrault said in an interview with RTL that the present system was “incomprehensible and illegible” with hundreds of charges plus local and national taxes – and above all “instability”.

He said that “20% of our tax legislation changes every year when the budget is voted” and added that the “whole system needs to be simplified”.

During the interview he confirmed that taking tax off “at source” was one of the avenues being explored as the government looked to set a “level playing field” for taxes.

He refused to reveal other proposals being looked at, but admitted that taking off tax “at source” would be a “simpler” way of merging the impôt sur le revenu income tax and the CSG social charges.

Mr Ayrault said there would be “no overall increase in taxation” because the government planned to reduce spending by €50million by the end of the five-year presidency.

He also attacked the anomaly of the prime à l'emploi tax credit for low earners, saying “workers who get it only receive it a year afterwards once they have filled in their tax form – but they pay CSG on their income right away, and have to wait a year for the state aid”.