The government will increase the various income tax brackets by 4.8% in 2024, to avoid penalizing French people who have benefited from salary increases to cushion the shock of inflation, the government announced on Tuesday. Minister of Economy and Finance Bruno Le Maire.
“I confirm to you that we will index the income tax scale to inflation, that is to say by 4.8%,” he said on the LCI channel.
Faced with inflation, which is expected to reach 4.9% in 2023 according to government forecasts, certain companies have agreed to salary increases, likely to bring into the scope of employee income tax which has so far not been sufficient paid to be subject to it. By increasing the tax entry threshold by 4.8%, previously set at 10,777 euros of annual income, the government is avoiding “seeing 320,000 employees fall into income tax”, according to Bruno The mayor.
“It represents almost 6 billion euros of shortfall for the state budget, so it is a very important effort but an effort that goes to work, to all those who get up in the morning, work and allow us to have these economic results”, insisted the minister, who must present the draft budget for 2024 at the end of September.
The government had already increased the scale of 5.4% for the 2023 tax return on 2022 income. According to the brackets currently in force, the income of French people can be taxed at 0% (if they are less than 10 777 euros annually), 11% (between 10,778 and 27,478 euros annual income), 30% (between 27,479 and 78,570 euros), 41% (between 78,571 and 168,994 euros) or 45% (above of 168,994 euros).
He also confirmed, without going into details, that the 2024 budget would include a “tax on excess profits” made by motorway companies.
Failing to completely eliminate in 2024 the second half of the CVAE, a production tax weighing on businesses, Bruno Le Maire confirmed that one billion (of the remaining four) would be eliminated next year. He also announced the elimination of the minimum contribution of 63 euros to the CVAE which weighs on some 300,000 companies, mainly VSEs and SMEs.
He also announced an agreement with these two sectors to “together finance a biofuel sector”. The tax advantage will be reduced gradually, insisted Bruno Le Maire, by 2.8 cents per liter each year from 2024 to 2030.
The minister finally clarified that negotiations between manufacturers and distributors should end on January 15, instead of March, in 2024, and wondered “if we should not have more regular negotiations.” He also announced that he would contact the Minister of Agriculture Marc Fesneau with the observatory of price formation and margins to ensure that the margins of agricultural producers are well protected.