Taxes: the housing tax of the habitual residence disappears

Posted on September 24, 2022 at 11:00

Residence tax, continuation and end. For the last time this year, a part of the French will pay the housing tax on the main residence, owed by owners and tenants. These are the richest 20% of households, the rest are already exempt from this tax since 2020.

Exempting the richest households was not part of Emmanuel Macron’s campaign program in 2017. It was the intervention of the Constitutional Council that was behind this extension of the measure to all households. The trajectory has been divided into three stages: reduced by 30% last year, the bill of the richest is reduced by 65% ​​this year, then 100% next year.

Purchasing power

This tax reform, whose total cost reached 18.5 billion euros, will remain one of the most emblematic of the Macron years, with the abolition of the wealth tax. The government has advanced it a lot to make it a symbol of its defense of purchasing power.

However, it has drawn criticism. “The tax was paid by almost all the inhabitants of each municipality and allowed them to be made aware of the cost of local public services, which could limit requests for expansion and improvement of these services and therefore the increase in public spending,” So laments François Ecalle, former magistrate of the Court of Auditors, who prepared an evaluation of the fiscal measures of the first five years for the Montaigne Institute.

local finance

The disappearance of this tax on residence, the amount of which varies from one municipality to another (600 euros on average), sparked an intense debate in Parliament on the compensation mechanism for local authorities. Thus, in 2019 a profound reform of local finances was adopted.

As shown in a report by the General Directorate of Public Finances (DGFIP) published in July, this has led to a sharp increase in the share of taxes paid by households (property taxes, domestic waste tax, fractions VAT) at the local authorities. ‘ basket of resources.

In 2021, these “domestic” taxes represented 80% of local tax resources compared to 69% in 2020. Economic taxation, which includes the contribution on the value added of companies (CVAE), represented the remaining 20% ​​(compared to to 31% previously).

Not for second homes

Last year, the State also collected 3.1 billion euros from “overcompensated” municipalities and paid 3.7 billion euros to “undercompensated” municipalities, according to a correction coefficient mechanism established in addition to resource transfers. In 2021, 51% of the municipalities were in a situation of overcompensation greater than or equal to 10,000 euros, 30% of the municipalities were undercompensated and 9 were in a “neutral” situation for not collecting the housing tax, according to the DGFIP.

If the property tax for the main residence disappears, the taxpayers do not end up with the second home tax . And in some cases, the bill skyrockets: cities in narrow neighborhoods (with a housing deficit) voted this year for a housing surcharge of up to 60%, the maximum allowed.

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