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France's Ayrault Confirms 'Tax Pause' In 2015

by Ulrika Lomas, Tax-News.com, Brussels

19 September 2013


French Prime Minister Jean-Marc Ayrault has pledged that there will be a "tax pause" in France, albeit in 2015 rather than 2014, as initially announced by the Government.

In an interview with Metronews, Prime Minister Ayrault conceded that plans to increase value-added tax, to raise retirement contributions, and to lower the family income tax break ceiling (le quotient familial) next year, within the framework of the 2014 Budget, merely represent a "slow down" in tax hikes. There will be a slowdown in tax rises next year before moving towards an effective "tax pause" in 2015, Ayrault said.

This is not merely an easy solution to fill budget gaps, Ayrault explained, but a means with which to generate new revenues for a specific purpose. Furthermore, the Minister emphasized that the Government has made unprecedented savings totaling EUR15bn (USD20.3bn) in 2014, to ensure that tax rises are as small and painless as possible.

Finally, Ayrault confirmed latest Government plans to introduce a tax discount mechanism (décote) for the first two income tax brackets next year, in addition to plans to re-index the income tax scale to inflation in the upcoming budget. Both measures are very important for France's most modest earners, and are vital to preserving their purchasing power, Ayrault stressed.

TAGS: individuals | tax | value added tax (VAT) | retirement | budget | France | tax breaks | inflation | individual income tax | European Union (EU) | Europe

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