Implementing tax relief termination for pensioners is perceived as a "detrimental decision" by Marc Touati's perspective.
Taxing Retired Folks: The Controversial Debate Raging among Pols 🗣️
Economist Marc Touati ain't mincing words when it comes to the debate about eliminating tax exemptions for retirees. He calls it a "terrible move." 👎
© Snap from BFMTV By Solina Prak Published on
To save €40 billion for the 2026 budget, the government is considering nixing the 10% tax break currently enjoyed by retirees. This change would provide €5 billion in annual savings, but it's not gaining universal support. And as of now, there's no decision made on the matter.
During a chat on the BFMTV set on April 28, economist Marc Touati shared his thoughts on the topic.
"It's bad news", he said. "It's a horrible decision." So, why the 10% tax break? Well, retirees have less income, according to him. "Pensioners have fewer expenses compared to employees, but they have other expenses. And there's a social role retirees play. They help their kids, grandkids, thus creating a sense of community."*
So, how much will slicing the 10% tax break cost you? 💰
"Many retirees fall into impoverishment due to this drop in income", Touati noted. In his view, it's not the elderly who should tighten their belts, but the government. "If we do away with this break, it means a higher tax bill, but the government stated there would be no tax hikes."*
He cautioned, "This action sends an extremely dangerous signal for societal stability. Economically, it doesn't make sense, and I doubt it'll bring in the promised €4 billion. Even if it did, we'd be far off the €40 billion goal for reducing our deficit."
When can you retire comfortably? 💼
Alongside this article, take a gander at:
- Taxes
- Fiscal policies
- Retirement pensions
The Facts:The plan to axe the 10% tax break for retirees carries significant social, economic, and fiscal implications:
- Financial hardship for retirees: Approximately 8.4 million pensioners, including those with limited financial flexibility, may face increased tax burdens, potentially hurting their ability to cover essential expenses like healthcare and housing.
- Political backlash: Pensioner unions have strongly opposed the measure, warning of widespread discontent and protests, potentially fueling social conflicts.
- Reduced consumer spending: Lower disposable income for retirees might result in decreased spending in sectors like retail, hospitality, and healthcare, impacting regions with an older population.
- Labor market alignment: Proponents argue the tax break is outdated, as it was designed to balance benefits between workers and retirees. Removing it could theoretically encourage longer workforce participation, although the extent of this impact is disputed.
- Budgetary relief: The move is part of France’s €40 billion budget overhaul for 2026, contributing to lowering the 5.8% GDP deficit recorded in 2024.
- Long-term uncertainty: While the elimination of the tax break generates immediate savings, the broader economic slowdown due to reduced retiree spending might indirectly affect tax revenues, partially offsetting the gains.
Broad Context: The proposal reflects a contentious balancing act between fiscal consolidation and social justice, with the risk of widening generational divides over tax policy. 👀💸
- Economist Marc Touati, in a discussion on BFMTV, warnedthat eliminating the 10% tax break for retirees sends an extremely dangerous signal for societal stability.
- The fiscality implication of axing the tax break for retirees, as stated by Touati, is that it might lead to financial hardship for millions of pensioners, potentially impairing their ability to cover essential expenses.
- Touati also pointed out that the business sector could be impacted by reduced consumer spending from retirees due to higher tax bills, should the government's proposal to nix the tax break go through.
- In a unanimous stand, pensioner unions have cautioned against the measure, warning of widespread discontent and potential protests, which could lead to social conflicts.
