The Court of Auditors’ warnings follow one another, and are similar: to control public spending. This is the refrain at a time when Bercy is being asked to save money. After having crushed the exceptional measures in the fight against rising energy prices, the wise men of rue Cambon now have the tax credit on personal services in their sights. A system generalized in 2018 which allows French people using home help to benefit from a tax advantage.
In a report published this Wednesday, March 27, the financial policeman denounces a system that is “far too expensive” for “modest” and “poorly evaluated” results. In 2022, for example, this tax boost cost the State 8.8 billion euros. This is 40% more than in 2012. Compared to the hourly rate, this figure represents on average 9.38 euros of public aid, “i.e. an amount close to that of the gross hourly minimum wage” underlines the Court of Auditors.
This dizzying increase would draw its source from three distinct phenomena: the strengthening of certain support systems, the increase in the hourly cost of home help activities linked in part to the increase in the minimum wage. And finally, the extension of the use of service providers, “whose prices are higher” than those of a self-employed person who acts as home help and invoices the individual for the provision of a service.
A helping hand for the wealthiest?
More generally, the Court of Auditors questions in its report the legitimacy of this tax advantage because this financial support could only benefit a tiny part of the population. Because more than half of households with an average tax income above 100,000 euros per year – which represent only 3% of French households – have home help.
Compared to less than 10% of households whose tax income is less than 25,000 euros per year. Thus, much more than age, the use of personal services remains closely correlated with the income level of the beneficiaries, raising fears of a “windfall effect”.
Only 70,000 jobs created since 2005…
Another observation made by the Court of Auditors: several meters seem to separate the balance sheet of the wise from the expected results. As a reminder, at the time of the generalization of the system, the executive presented the tax credit as a means of combating hidden work, of stimulating employment and encouraging hiring, but also of reconciling life family and professional life by allowing parents or accompanying adults to receive help.
However, it is clear that this system produces “disappointing results”, deplores Pierre Moscovici, first president of the Court of Auditors, who describes the results in terms of job creation as “insignificant”. Some 70,000 additional full-time equivalents since 2005… This, even though life expectancy is constantly improving, the number of elderly people needing to use this type of service is increasing.
However, the report welcomes the decline in “undeclared” work which is “certainly to be credited to support systems”. The fact remains that these regularizations ultimately benefit individual employers: the remaining cost being 14 to 19% lower than the price they would have had to pay for a service carried out “under the table”. An incongruity for the magistrates, who summarize: “The State today very largely subsidizes respect for the law and the declaration of work”.
1 billion euros in savings found
While it recommends stripping France’s budget by 50 billion euros over the next three years, the Court of Auditors invites the executive to look into the tax credit on personal services. A few readjustments could make it possible to make savings of almost 1 billion euros per year.
To do this, several possibilities are available to the government. Reducing the scope of activities eligible for state support, for example. Because to date, the system applies to “a heterogeneous set of activities carried out according to various employment arrangements and legal regimes, and bringing together various professions”, argue the wise people who also recommend increasing the applicable VAT for personal services – currently 10% and from 5.5% for childcare – to 20%.
Towards a frontal attack on the tax credit?
Perhaps more controversial: touching on the tax advantage, for example by reducing the amount of the tax credit for activities that do not fall within the scope of policies in favor of autonomy and childcare .
Two scenarios could therefore be considered. The first, more radical, consists of refocusing the boost on daily life activities only, the amount of which would be reduced. This, in return for a reassessment of social benefits. Failing this, a tax rebate modulated according to the activities concerned or the socio-economic situation of taxpayers. The future of the personal services tax credit is now in the hands of the government.