France Unveils 2010 Social Security Budget

by Ulrika Lomas, Tax-News.com, Brussels

06 October 2009

French Budget Minister Eric Woerth has recently unveiled details of the government’s 2010 social security finance bill, containing a raft of tax initiatives, specifically designed to reduce the number of ‘social’ tax breaks available in France (niches sociales), thereby generating an additional EUR3bn in tax revenue for the government.

Determined to reduce the country’s soaring social deficit, yet strongly opposed to raising existing social contributions, the government plans to reduce instead the number of highly controversial social tax breaks.

According to the government, to increase existing contributions at the present time would merely serve to delay France’s exit from the economic crisis, and to hinder the competitiveness of the country’s economy.

Aware of the desperate need to address the issue of tax loopholes, and to create a fairer tax system, the government has announced that all forms of income must in future become subject to social contributions (CSG), including income from capital.

Consequently, the government has proposed the following measures in its 2010 social security finance bill:

• The introduction of a social levy of 12.1% on capital gains derived from the sale of transferable securities, such as shares and bonds, applicable from the first euro. This measure will not, however, be retroactive, and will take effect from January 1, 2010.
• The abolition of the existing provision exempting life assurance contracts from social contributions, following a death.
• The rise to 4% of the ‘forfait social’, a fixed levy paid by businesses on secondary income, such as participation and profit-sharing revenue.
• The doubling of the rate of employers’ contributions on enhanced final salary pensions for top managers.

The government has also announced its intention to strengthen its policy of combating tax fraud, and to increase the daily hospital charge from EUR16 to EUR18.

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