The finance bill for next year, which will be presented on September 25 by the government, will call on businesses to save money. Among these, measured cuts in tax loopholes.
Constantly pampered, companies? Many of the economic reforms launched by Emmanuel Macron over the past two years have been hailed by employers. Nonetheless, over the past year, the government has started to make a habit of asking companies to make ends meet with difficult fiscal years. This was the case for the Finance bill for 2019 – with in particular a transformation of the CICE in lower charges less advantageous than expected – but also last December when it was necessary to finance the measures in favor of “yellow vests”. The 2020 budget will not escape this rule, even if the announced measures have not caused too much stir in the business world.
Limited cuts in tax loopholes
In the spring, the government announced 1 to 1.5 billion euros of cuts in tax loopholes from which companies benefit, to finance the measures resulting from the great debate. Finally, the drop should only be 620 million next year, proof of the difficulties in cutting tax expenditures. Bercy has notably planned to review the tax advantage for non-road diesel (GNR) granted to certain sectors (in particular public works), already in the sights last year. Cautious, the executive decided that the end of this tax advantage will finally be done in three years – with a first reduction of 45% in July 2020 – and accompanying measures.
Bercy has also decided to regulate the specific standard deduction (DFS) which benefits certain sectors (building, cleaning, etc.). The planer on this social niche should save 400 million, on the 1.6 billion it costs public accounts.
By 2021 this time, the research tax credit (CIR) should experience a marginal adjustment on the deductibility of the “fixed operating costs”, which should lower the bill by 200 million. The retouching of the device on patronage should bring in 80 million.
A lower income tax drop than expected
Large groups will have to wait to fully taste the promised tax cuts. Already last December, the executive canceled the corporate tax cut (IS) planned for 2019 for large groups (whose turnover exceeds 250 million euros). For 2020, it will take place, but will be weaker than expected. Thus the corporate tax rate of these large groups will drop from 33% to 31%, whereas the government initially expected 30%. This should save 700 million euros. The executive continues to promise a 25% rate in 2022.
The cash flow from Action Logement punctured
It is a string on which Bercy has already pulled in the past. The government will thus draw on the reserves of Action Logement – formerly called the “1% Housing”. This fund is supplied by employer contributions from companies with more than 20 employees (this threshold has risen to 50 since the adoption of the Pacte law). The government has planned to withdraw 500 million euros at once from the structure’s treasury and the sum should be directed to the Ministry of Housing.