Thursday, 10 April 2014

I is for Impôts

No one likes paying taxes. Like vaccinations and going to the dentist, it is necessary and ultimately for your own good.

Tax in France is hilarious. 

The actual income tax, the bit that has most other nations on the hop, is not unreasonable. There are generous tax breaks, income is assessed on a household basis and the number of dependants you have is also put into the mix, meaning that for many, the tax burden is not too onerous.

Where French taxation takes off on a flight a fantasy is the arena of cotisations, roughly equivalent to Social Security Contributions. They are draconian. In some cases, your cotisations can be as much as 50% of your gross earnings or more.
What is so fascinating about the cotisations system is that they vary wildly from metier to metier. In the UK, National Insurance contributions are the same across the board. Everyone pays the same percentage of their income. It's fair.

In France, the level of cotisations you must pay depends on the exact nature of the work you do. And precision is everything. A friend teaches private English classes and classed himself as an animateur (sounds like someone in the circus but I think means someone who runs ad hoc workshops). The powers that be chose to think otherwise, even though they were not the ones doing his job, and really had no true understanding of it, and re-classed him as a professeur. The increase in cotisations was staggering. It's all in the name.
A few years ago, if you started a small business here, you were required to pay roughly 3,000 in cotisations up front for three whole years before your actual liability was assessed. This system is still available for those who choose it but now the Auto Entrepreneur has been introduced. It is a great system for small enterprise that allows you to pay as you earn (novel!).

But there are rumblings. Unions and Government Ministers have railed against this system and there was a point a year or so ago when we thought the whole thing would be axed. It is still not guaranteed to continue.

The reason for the acrimony is that unscrupulous gaffers, mainly in the building trades, have leapt on the opportunity to slash their employee tax burden by making their workers redundant and re-employing them as independent contractors. Thus, two chaps doing exactly the same job, could be paying radically different amounts of cotisations and anyone can see that that isn't fair.

On the upside, the benefits the State offers in return for our massive cotisations are great. The health service is second to none and although not completely free is very nearly so. There are a sheaf of benefits available to parents, including a generous handout at the beginning of the school year to cover the costs of stationery and joining up for after school activities. Societies are given perks like free use of public buildings and advertising (see S is for Societies). Every Commune provides activities and support for its elderly, young families and anyone else in between.

You pays your money and takes your choice. Though how much you pay very much depends on finding the right pigeon hole.

No comments:

Post a Comment