Law & Numbers - News Tax

New tax measures to reduce public deficit

15.11.2011 (France)

François Fillon unveils on Monday November 7th, another 18.6 billions euros effort between 2012 and 2013. This plan would allow 65 billion euros total savings by 2016. In order to secure the public debt reduction goal despite the economic slowdown, the Government takes additional measures and accelerates the current reforms.

COMPANIES

1 - Corporate tax - 5% increase for large companies
It is proposed a 5% increase of the corporate tax paid in 2012 and in 2013 on 2011 and 2012 incomes for companies with a gross income exceeding 250 millions euros.
Expected gain : 1,1 billion euros in 2012 and 2013.

2 - VAT - Creation of a 7% intermediary rate
It is proposed to create an intermediary rate fixed at 7% that would apply to products currently benefiting from the 5.5% low rate (restaurant and catering, home renovation...). This new VAT rate would not apply to essential goods (food, energy, goods and services to disabled people).
Expected gain : 1.8 billion euros per year.

INDIVIDUALS

1 - Income tax, Wealth Tax, Gift Tax - No reevaluation of tax rate in 2012 and 2013
It is proposed to maintain unchanged the thresholds of the brackets of income tax, wealth tax, inheritance tax and gift tax.
Expected gain : 3.4 billion euros.

2 - Increase of the withholding tax rate on dividend and interests
It is proposed to increase the rate from 19% to 24% by January 1st, 2012.
Expected gain : 0.6 billion euros per year.

3 - New global decrease of the credits and tax cuts of 2.6 billion up to 2016
In particular, it is proposed to remove the Scellier rebate in 2013, to refocus the zero-interest plus loan on new building, and to reduce the tax credit for sustainable development.

4 - Social security payment and housing benefits - 1% increase in 2012
Pension and social minima will be reappraised as usual.
Expected gain : 0.4 billion euros in 2012.

5- Acceleration of the reform of the retirement plans
It is proposed to reduce to 2017 the transitional period extending the retirement age to 62 years old.
Debt reduction : 4.4 billion euros by 2016.







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