At the end of five hours of debates, the deputies voted on Friday to completely abolish the housing tax on all main residences in 2023. Faced with the discontent of local elected officials, the Finance bill was amended to the margin, with a thaw in rental values and a gesture of 250 million euros for the departments.
It is the most profound reform of local finances since the abolition of the business tax ten years ago. The Assembly adopted on Friday, with 34 votes in favor and 20 against, the end of the housing tax on main residences for all households by 2023. Five hours of debates will have been necessary to come to the end of the 28-page long article which defines the compensation mechanism provided for local authorities.
In general terms, the text provides that the 35,000 municipalities currently collecting the housing tax are assigned the revenue from unbuilt land in the departments. The inter-municipal authorities and departments will receive a fraction of VAT equivalent to the amount of taxes they previously collected. All this causes a tax transfer of 17 billion euros, causing local authorities to worry about the sustainability of their resources.
Common simulation by municipality
As is often the case in taxation, and even more so for local finances, the devil is hidden in the details. In this case, elected officials deplored not having all the details. The announcement by Secretary of State Olivier Dussopt, in full examination of the text, that simulations commune by commune had been sent to them triggered an incident in session Thursday evening.
Housing tax, royalty …: what the local tax reform provides
Some opposition members, who did not receive these simulations, asked to postpone the examination for three days. To which the government replied that the text would undergo a second reading after consideration in the Senate.
Once again, the opposition was able to express its rejection of this reform, which for the deputy Christine Pires Beaune (PS), “Does not respond to a request from local authorities”, but was “An electoral promise, certainly popular, in any case very poorly prepared”. The deputy Charles de Courson (Liberties and Territories) denounced “A social error”. Due to exemptions and reductions, “40% of the housing tax was already a function of income”, he explained. “You will relieve the better-off from any housing tax when they could perfectly pay it and you will not relieve the most modest since they did not pay it”, he defended.
On the government side, Olivier Dussopt welcomed the abolition of a tax that “All local elected officials, associations of elected officials and parliamentarians have always considered particularly unfair”.
Revalue rental bases
The executive acceded to parliamentarians’ request to revalue the rental bases up to inflation, ie 0.9%. This revaluation was not originally foreseen in the text and would have caused a loss of earnings of 250 million euros for the communities. The Assembly also voted an amendment arrived at the last minute in favor of the departments which consider themselves the big losers of this reform: an additional fraction of VAT, equivalent to 250 million euros, will be granted to them.
On the other hand, the majority refused to modify the rate binding mechanism aimed at curbing a surge in other local taxes, despite criticism from the opposition. Similarly, the amendment aimed at aligning the tax on second homes with that weighing heavily on vacant housing, voted in committee, has not passed the ramp of the public session.
Finally, discussions focused on the year chosen to calculate the compensation for municipalities. This compensation will remain based on 2017 rates, which the opposition considers unfair for municipalities that were forced to increase their rates in 2018 or 2019. “The municipalities which, on the other hand, made an effort on their rate would be penalized. It is not fair “, argued Olivier Dussopt.
MEPs vote for a surcharge on Parisian business districts
The Assembly voted on Friday for a controversial surtax on offices located in the business districts of Paris and Hauts-de-Seine to finance Greater Paris. The amendment by LR deputy Gilles Carrez (Val-de-Marne), co-signed by general rapporteur Joël Giraud (LREM), was adopted by a narrow majority of 26 votes to 18, with 7 abstentions. Are concerned four communes of Hauts-de-Seine (Boulogne-Billancourt, Courbevoie, Issy-les-Moulineaux and Levallois-Perret) and nine Parisian arrondissements (1st, 2nd, 7th, 8th, 9th, 10th, 15th, 16th and 17th) which will see a 20% increase in the office tax. The president of the Hauts-de-Seine department, Patrick Devedjian, had denounced, before the vote, “a stab in the back of the business district of Paris-La Défense”, at the time of Brexit.