Personal services: these tax credits that the government could cut

Personal services these tax credits that the government could cut

The year 2023 has just begun. However, the executive is already thinking… of the finance bill for 2024. The government’s objective? “Schedule significant spending cuts from the 2024 budget”, announced Bruno Le Maire on January 29 in an interview at the JDD. “We will comb through all public spending: State, local authorities, social field”, warned the Minister of the Economy.

In his wishes to economic actors, at the beginning of January, Bruno Le Maire had announced a meeting of public finances, during February, where “the future structural projects for savings in public expenditure” will be presented. In search of sources of budgetary savings to be offered to Bercy, parliamentarians from the majority have also launched a study to review the various activities eligible for the tax credit for personal services. The leader of this “task force” is MP Daniel Labaronne, member of the Finance Committee at the Assembly. The first proposals should be made this summer. “This work must be completed at the end of June or the beginning of July”, confides Daniel Labaronne to L’Express.

The subject is sensitive. It concerns many French people. Personal services employ more than 1.5 million employees and 4.5 million households benefit from it, according to figures from the Federation of Personal Services (FESP). They include 26 activities, such as childcare, small DIY work, gardening and school support. This tax boost allows 50% of the expenses incurred to be covered within the limit of a ceiling of 12,000 euros per year. But it has a cost for public finances: 5.7 billion euros in 2022.

“We are not in a plane logic”

Too expensive ? “We are not in a logic of plane and reduction, wishes to reassure Daniel Labaronne. We are in a logic of research of efficiency of such or such public expenditure”. If “certain tax credits are effective, fair and useful, we are not going to cut them. On the other hand, we can wonder about those which are perhaps no longer legitimate”, continues the deputy for Indre-et- Loire.

Cautious, he prefers not to advance on the tax credits likely to be reviewed. It must be said that the majority already has a lot to do on another socially explosive subject, pension reform. The amount of expenses, namely 50%, could in any case be reduced. “Everything is part of the reflection. There is no taboo or red line”, says Daniel Labaronne. “You shouldn’t forbid yourself. 50% coverage, isn’t that too generous?” released in January the entourage of Bruno Le Maire with of the Parisian.

The equation is difficult for the majority, “caught in a pincer movement” between on the one hand “the imperatives of good management of public expenditure” and on the other his wish not to increase taxes, recognizes Daniel Labaronne. However, “when you lower the tax loopholes, you increase the compulsory levies”, notes the deputy.

Last fall, during the discussion around the finance bill (PLF) for 2023, Daniel Labaronne had tabled an amendment providing for a cap of 1000 euros of expenditure per year on the tax credit for home lessons. “It generated a lot of opposition,” recalls MP Renaissance. The amendment was ultimately rejected. But it “made it possible to highlight” and “generate debates” on this subject, welcomes the elected official.

“It appeared that there was no tax credit system to finance group lessons for four or five people”, notes this doctor of economics. He wonders: “If we make savings on private lessons for one child, perhaps we can recover the amount of these savings to finance private lessons for four or five children.” In other words, “amounts granted to certain tax credits could finance other services to the person”, advances the deputy.

An increase in undeclared work?

The question of a possible blow to the plane on the tax credits is not new. Until now, parliamentarians were unable to know the financial cost of each of the 26 activities. But they will be able to base their work on numerical data. Indeed, an amendment voted during the PLF 2023 now requires individuals to fill in the nature of the activity of their home employee in their tax return.

“We were sorely lacking in information on the breakdown of expenses subject to a personal services tax credit. As long as we did not have the breakdown, we could not conduct this reflection”, notes Daniel Labaronne.

The actors of the services to the person are already worried about a possible blow of plane. “The look at the personal service tax credit is not that of pragmatism, but of ideology”, protests Pierre-Olivier Ruchenstain, director general of the Federation of Individual Employers (Fepem), near Capital. A questioning of tax credits could in particular lead to a return to undeclared work, fear these actors. “This system has undeniably contributed to reducing undeclared jobs, but today we have very effective means of identifying undeclared work and combating it”, replies Daniel Labaronne. The debate promises to be lively.

lep-sports-01