With a cost representing nearly 350 billion euros annually for the State, retirement pensions are increasingly targeted by budgetary cuts undertaken by public authorities. If the government has already started to drain the income of retirees by deciding to postpone the next increase in basic pensions by six months, other measures are being prepared behind the scenes. One of them aims in particular at a tax advantage which retirees benefit from when filing their income tax returns.
Most retirees are familiar with this tax advantage. And particularly those who pay income tax. This is in fact the 10% reduction from which all retirement pensions automatically benefit. A very old system, since its creation dates back to 1977. At the time, its establishment was justified during parliamentary debates by ” the increase in tax pressure following retirement (…)felt like an injustice“. But today, the retention of this rate of 10% – modeled on the allowance for expenses which employees benefit from – is struggling to find a tax justification.
In a recent report delivered on October 14, the Council for Compulsory Deductions (CPO) – an organization attached to the Court of Auditors – precisely points out this reduction. According to the data published in this study, the tax advantage represents 4.6 billion euros per year. If 8.4 million retirees obtain a tax gain thanks to this measure, the amount of the latter varies greatly depending on the amount of the beneficiaries’ pensions.
According to CPO calculations, nearly 30% of the overall cost of the reduction benefits the 10% of retired households with the wealthiest incomes. The organization thus criticizes the lack of targeting of this measure, which benefits all retirees regardless of their income level. Still according to this report, “the favorable tax treatment of wealthy retirees compared to active workers does not correspond in practice to any identified public policy justification“.
The Council proposes to refocus the system on retirees with modest and intermediate incomes by introducing a single deduction affecting both pensions and life annuities capped at a certain amount. The wealthiest 10% of retirees would therefore no longer benefit from the tax reduction. According to figures published in the report, this measure would bring in 1.3 billion euros to the State each year and 1.4 million retirees would be directly affected.
This measure is, to date, only a recommendation formulated in the report of an organization attached to the Court of Auditors. But it has just been taken up by an amendment from the Modem group in the Assembly and could therefore well appear in the finance law. The removal of the 10% reduction is in all cases among the options offered to public authorities to reduce the overall cost of pensions. Other measures are also discussed in the corridors of ministries, such as a deindexation of pensions in relation to inflation or an increase in the CSG.
Related News :