Last week, the French Ministry of the Economy and Finance announced the official absolution of the housing tax, the taxe d’habitation, for 80% of the country – one of President Macron’s widely promoted commitment during his presidential campaign. On 17th July, Macron held the first national Conference of the Territories (Conférence Nationale des Territoires) at the Senate, bringing together the French Prime minister, Edouard Philippe, along with town hall representatives to discuss, amongst other topics, the new tax policy and its implementation.
The government’s latest decision to gradually reform the housing tax starting in 2018 has given rise to a number of concerns. The original plan was to phase out the tax through three yearly reductions until 2020, exonerating nearly 80% of French tax payers. However, during the meeting, many politicians noted the potential loss of several billions of euros of income for the local governments in the coming years. Eric Woerth, the president of the Finance Committee of the Assembly, challenged the president’s economic plan alongside President of the Senate, Gérard Larcher, who warned officials of the prospective ‘loss of fiscal autonomy’.
Currently, the taxe d’habitation is paid by French residents including home owners and renters of primary, secondary housing and non-habitable spaces (i.e. garages). The tax is calculated annually according to the resident’s status on 1st January. This particular tax is not set at a definite rate across the country, but varies from one location to the next.
“The tax on housing is an unjust tax,” claimed President Macron during his presidential campaign, promising he would address the issue once elected and reassured the people that there would be no tax increase as compensation from the reform.
Despite the present disagreements with the new decree, the core objective would be to exempt all tax payers whose fiscal income does not exceed 20,000€ per year. Those for whom the income is above this threshold would continue to pay the tax.
For more details about the housing tax, please visit www.service-public.fr.