France To Cut Income Tax Rate For Lowest Earners

by Jason Gorringe, Tax-News.com, London

27 April 2009

France is to slash the income tax burden on France’s lowest earners in order to restore consumer consumption within the economy, announced a spokesman for the government on April 20.

The government proposes retroactively reimbursing two-thirds of income tax payments for the fiscal year 2008 for households whose incomes amount to less than EUR11,673 per person, per year. The lowest income tax rate of 5.5% which is levied on earnings below EUR11,673 will therefore be substantially reduced temporarily during 2009. Households recording incomes within the 14% bracket will also see a reduced income tax burden, although the government has not yet disclosed full details.

The concessions, coupled with February’s EUR2.65bn package, brings France’s support for its less affluent members of society to EUR3.75bn – the French government citing that its latest package could provide an injection of EUR1.1bn to the economy. The concessions are expected to support six million households nationwide.

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