Taxe d'habitation 'completely abolished' by 2021

Loss in revenue will be offset by budget savings, officials say on publication of a report on the overhaul of local taxation

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The government has given its clearest indication yet of a timescale for 'completely abolishing' taxe d'habitation, with the Prime Minister's office at Matignon saying it will disappear "by 2021 at the latest".

However Connexion has asked for clarification as to whether this will also include second and holiday homes and we will follow this up for the June edition of the newspaper.

The first stage - abolishing the tax for 80% of households, starting with the least well-off - is already under way. Prime Minister Edouard Philippe said in August 2017 that 30% would be exempt from the tax in 2018, and 80% by 2020.

"Taxe d'habitation is a bad tax, an unfair tax, the basis for which was set in the 1970s without taking into account the development of towns, or areas. Our objective is to reflect on how to have a more intelligent local tax system," he said at the time.

But now Matignon has put a cap on the deadline for the tax disappearing completely at the publication of a report on the overhaul of local taxation, which offered two options for the complete abolition of taxe d'habitation, which set the latest date as 2021.

Matignon also said that the cost of losing taxe d'habitation revenue would be offset by budgetary savings, and insisted it would not have an effect on public deficit targets. President Emmanuel Macron has already pledged not to raise new taxes to offset the loss in income, now estimated to be €24.6billion by 2020.

In its budget stability programme, the government projected a public deficit of 2.3% in 2018, 2.4% in 2019, 0.9% in 2020 and 0.3% in 2021, before returning to a balanced budget in 2022 (+0.3%).

During the presidential campaign, Emmanuel Macron promised to abolish the housing tax for the 80% of the least well-off households, in three successive tranches between 2018 and 2020. The total cost of this measure was then estimated at just under €10billion. Local authorities, however, have expressed concern that cutting taxe d'habitation will force them to reduce amenities. Currently, it provides 36% of communes' taxable income. But President Macron has promised that state funds will cover the loss to the nearest euro.

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