France may move to pay-as-you-go in 2009

19th December 2006, Comments 0 comments

PARIS, Dec 18, 2006 (AFP) - French tax-payers received an unusual piece of good news Monday to enliven the Christmas season: under plans being finalised at the finance ministry, 2008 is to be tax-free!

PARIS, Dec 18, 2006 (AFP) - French tax-payers received an unusual piece of good news Monday to enliven the Christmas season: under plans being finalised at the finance ministry, 2008 is to be tax-free!

For those reluctant to believe it, the rare act of government largesse was spelled out by the finance minister Thierry Breton who told Les Echos newspaper: "I am suggesting that 2008 be fiscally blank."

The anomaly will come about if — as proposed — France switches to a "pay-as-you-go" income tax system in 2009, in line with most of its European neighbours.

Currently earners pay their tax on income earned in the previous year, but from 2009 the government wants people to pay as they earn, with the levy deducted from their monthly salary.

The result would be that in 2008 earners would pay tax on 2007 income, and then in 2009 they would pay tax in 2009 income. 2008 will simply disappear from the account books.

The change to pay-as-you-go — which the government says will increase revenues because it is more efficient — could be given the green light before April's presidential election, Breton said.

"It is a win-win situation. The tax-payer will not pay tax for the year 2008, and the state will receive more in 2009 than it would have," he said.

Of course workers will not notice any immediate benefit, because they will continue to pay tax each year. The advantage will come when they stop work, and are not taxed in their first year of retirement.

The mooted change was announced amid news that France's most famous singer, Johnny Hallyday, has decided to become a Swiss tax exile to escape his native country's crushing tax burden, which soars to 60 percent in the case of the most wealthy.

Hallyday, a 63-year-old national icon who has modelled himself as something of an Elvis Presley figure, said last week "I've had enough of the taxes we are forced to pay" and that he was to relocate to the Swiss ski resort of Gstaad.

Copyright AFP

Subject: French news

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