France plots £4bn tax grab on 14 million pensioners
Emmanuel Macron's government is plotting a €4.5bn (£3.8bn) stealth tax raid on pensioners as it grapples with a growing pile of debt.
The country is considering scrapping 10pc tax relief for up to 14 million pensioners as part of efforts to secure €40bn (£34bn) in savings from 2026.
The relief, introduced in 1978, is worth up to €4,123 per household, with a minimum of €422 per retiree.
A household whose total state and private pension income totals €30,000, for example, would be exempted from paying tax on €3,000 of the total, leaving them with taxable pension income of €27,000.
Éric Lombard, the economy minister, said last week that scrapping the relief was 'on the table' and 'not a taboo'.
But the French Confederation of Retirees (CFR) described the proposal as a 'profoundly unfair measure [which] affects a population that has already contributed their whole life to the system'.
Scrapping the tax break would save an estimated €4.5bn at a time when the country's budget deficit remains well above the 3pc GDP limit for eurozone nations.
France has one of the lowest retirement ages in Europe and one of the highest state pension entitlements relative to the cost of living.
But analysts believe that in order to balance the books, the government would need to take an axe to France's generous pension system – which accounts for over a quarter of public spending.
Prime Minister François Bayrou admitted last week that France faced a 'mountain of difficulties' managing its public finances.
He has previously hinted at plans to water down Mr Macron's controversial state pension reforms.
In 2023, the president pushed through legislation that raised the legal age of retirement from 62 to 64 by 2030 in order to help plug France's ballooning deficit – despite bitter resistance from political opponents, unions and the French public.
Citizens will need to work for 43 years – up from 42 – to receive a full state pension, which averages around €1,500 (£1,265) a month. By contrast, Britain's state pension age is set to rise from 66 to 67 by 2026.
Unions and retirees' associations have denounced the idea of the 10pc tax relief being scrapped. Force Ouvrière, a confederation of unions, said the removal would be a 'new blow to the purchasing power of the most modest'.
Thomas Ménagé, an MP and spokesman for Marine Le Pen's far-Right National Rally party, condemned the government's proposal, calling it a 'very bad idea'.
He argued that the measure contradicts previous assurances of no tax rises, and predicted that the removal of the allowance would lead to 500,000 retirees being taxed for the first time and 8.5 million seeing their tax contributions rise.
However, Gilbert Cette, president of the Pensions Advisory Council, voiced support for the removal of the tax break earlier this year.
Patrick Martin, president of Medef, an employers' organisation, described the application of a 'professional expenses' deduction to retirees as an 'illogical' and 'absurd' measure that will cost taxpayers €4.5bn a year.
A spokesman for France's economy ministry said: 'This option is part of the considerations underway within the framework of the upcoming finance law.'
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