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Taxe d'habitation completely abolished by 2021

The Connexion, May 10

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".

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

"Council tax 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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