Are tax increases expected in 2023? Bad news for the French budget

Will we have to put our hands in our pockets again? Since 2021, France has been facing inflation that has many consequences for households. Rising prices weigh heavily on your purchasing power. Inflation, which appeared quite suddenly, reached levels not seen in decades. And our taxes in all this?

Faced with this inflation, since the fall of 2021, the Government has been constantly working on the issue. Thus, the latter has taken massive measures, with concrete effects: establishment of a rate shield (gas and electricity), fuel reduction, payment of compensation for inflation and energy check. So thanks to this arsenalFrance has the lowest inflation in the euro zone. All this respectfully applying a sacred formula chanted by the government team: no tax increase! Will you keep your promises? Nothing is less safe!

Unheard of for over 35 years.

Due to its favorable energy mix and the different measures that make up the tariff shield, the inflation rate in France is among the lowest in the euro zone. We have to go back to the early 1980s to find such levels of inflation.

In fact, during over 30 yearsinflation continued bass. In France, it ranged from 0 to 3%, even 4%. It was even zero during the recent pandemic, it was even zero, even slightly negative, like in 2015-2016. But from thesummer 2021ME’inflation has sharply increased. Between July 2021 and July 2022 it went from 1.5% to 6.8%, before slowing down slightly in August to 6.5%.

Thus, in this current context of high inflation, a sharp rise in the price of cigarettes could arise while the financing of social security and the financing bills will be examined by the Council of Ministers, on Monday, September 26, 2022. In fact, if the taxation linked to cigarettes has not followed the pace of inflation, the government would consider changing the legislation on this matter, reveals the echoes .

Thus, in this current context of high inflation, the deadline for the presentation of budget texts is approaching. The bills on finance and financing of social security will also be examined by the Council of Ministers on Monday, September 26. But there are still burning issues to be resolved, with, among others, the price of cigarettes.

For the record, the law currently provides for an automatic rule to increase excise duties. And this, according to inflation, but in relation to the price increase of year N-2, and with a ceiling of 1.8%. Which, if it continues like this, would protect the tobacco market from the significant price increases that increasingly affect the entire economy. Please note that excise duties are indirect taxes on the sale or use of products such as alcoholic beverages, tobacco products, and energy products.

Towards a tax increase in 2023?

But let us not rejoice too soon. In fact, it is rumored, according to various sources, that the government is considering changing these rules. Therefore, IL would plan to change the legislation, with the plan to eliminate the ceiling for the tax increase indexed to inflation, and to base it on the N-1 year. This would result in duty increases of 5% to 6% at the beginning of 2023 (depending on the inflation observed in 2022), or even 7.5% adding the price increases observed in 2021 and 2022.

This will obviously lead to de facto higher taxes. An indirect increase, certainly, but an increase nonetheless!

“The increase in tobacco prices has two purposes”said the economist Philippe Crevel. The latter also directs the Savings Circle. “This is primarily a public health goal, but also, let’s not forget, to fill the state coffers. It is he who sets the amount of the increase.he continued… Not without remembering that we can talk about a tax increase.

What about the property tax?

The prospect of a property tax increase in 2023 is likely to be at the heart of parliamentary debates over the finance bill (PLF), which will be presented this Monday, September 26.

Thus, like every year, this text will include the fixed review of rental values. These serve as the basis for calculating this tax.

It is the evolution of the consumer price index from November to November that determines this revaluation. Thus, should be around +6% to +7%. For the record, the change this year was +3.4%, much less.

If it is likely that this revaluation will delight the municipalities and inter-municipalities that perceive the property tax, homeowners won’t listen to you the same way.

This fall, many taxpayers have already been unpleasantly surprised to discover a sharp increase in their local tax. For what reason ? The revaluation of the cadastral bases that are recalculated every year, in November, according to inflation. This revaluation increased by 3.4% in 2022. This obviously increased the property tax for all taxpayers.

It should also be noted that the amount of the invoice has also suffered an increase according to the municipal rate voted by each municipality. Some examples in 2022: in Marseille: +13.1%, in Tours: +11.6%, or Pau: +10%. Tax notices have increased considerably.

So the bill will be high for some homeowners: property tax will rise further by 3.4% this year, or 525 euros on average.

So, if in 2023 the cadastral bases are automatically revalued, mechanically they should increase by about 7% due to inflation. Thus, mechanically, the property tax of approximately 30 million owners will rise. And that’s not all ! The residence tax on second homes and the domestic waste disposal tax (TEOM) will also be in the line of fire of this tax increase.

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