Tuesday, May 20, 2014

Taxes : Are we slaving for the French government?

Today is the last day to fill the 2013 income tax. Talking about taxes, we realized that we are basically slaving for the government. Just see how much taxes we are paying:

1. Salaries
Looking at my payslip, every month the government is directly sucking around 25% of my salary, and my company has to pay an extra 50% for all the social charges imposed. Let's say I'm earning 1000€ a month, I will have only 750€ in my bank account, and the government is getting 250€ from me + 500€ from my company = 750€. So basically, for each working citizenship, the government is taking half of what he or she costs/earns into its pocket. The percentage may varies depending on which income group you are from.

And this is not the end, you still need to file for income tax, so once again one part of your salary is gone.

2. Beside salary, one might have other source of incomes, like interest rate from saving or investment, rental, inheritance...which the government also wants to have a hand on it.

3. Property (taxes foncières) and local taxes (tax d'habitation)
We have an apartment, so we have to pay property taxes each year.
And whether you own or rent, you will have to pay local taxes based on the size of your apartment / house / studio. This includes an annual fee if you own a TV.

4. Sales taxes (TVA)
With your net income, you are going to spend it on food, petrol, leisure, all type of bills...
Well, you have to pay sales taxes on them. Sale tax on food is around 5.5% if not mistaken, for other items it has increased to 20% starting from 2014. So, just imagine for whatever you are buying, you are paying 20% to the government. Since we are thinking to build a house, the TVA sums up to a gigantic amount which is quite scary.

5. Transaction costs
Buying and selling a property involves transaction costs that we have to pay to the government. For example, to buy a piece of land, we have to pay the government around 7% of the price. This is not all, since the local government has to build access roads linking to the new residential area, we have to pay another taxes once the house is built.

There might be other ways that the government is taking money from us, but these are what I could think of at the moment. My conclusion : the government is trying hard to take money from us. The first three income sources for the government are sales taxes, income taxes and company taxes. Unfortunately, what it gets from the people is still not enough to cover all the expenses, which resulted in budget deficits. In order to cover the deficits, it has to borrow, so part of the expenses are to pay interest rates on debts.

I don't know if this is fair to have to pay so much taxes, as on the other hand we have good social benefits. Some of them are too good that it simply costs too much to maintain, for example healthcare, retirements, free tertiary educations. Many reforms are needed but when you have the best, it is hard to accept a downgrade.

Now I understand why some people prefer to not have salary increment. The more you earn, the more taxes you have to pay and besides, you might not be eligible anymore to certain social benefits (ie childcare, housing allowance...)



7 comments:

  1. I'm American, and I'd rather pay more in taxes and have the inexpensive health care child care, and education, as well as the retirement benefits you have in France. Taxes seem expensive until you consider the out-of-pocket cost for all that.

    Actually I'd rather have the extremely wealthy pay more in taxes first, but I am willing to pay my share.

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    1. I'm willing also to pay my share, but until certain limit. I heard that around 50% of French don't pay taxes because their income are too low, so we are talking about 50% of the population paying for the other 50%.

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  2. I wish they do "prélèvement à la source", as they do in Canada. Usually, we get a tax refund. They reimburse you if they took too much. We pay a lot of taxes here, and I'm afraid the tax payers cover barely enough all the expenses and the generous social benefits. I recently learned that women who give birth get 900 euros, so I guess this money has to come from somewhere.

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    Replies
    1. Yeah, love the tax return concept, I always got tax refund when I was living in the USA. For the prime de naissance, not everyone gets it, your household income has to stay under certain income range.

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  3. As an engineer earning 2200€ / net month and having 4 kids (my wife having no income at the moment), we are not paying any income tax.
    Actually I made the math and we would have to earn an additional 15000€ / year to start paying even the first euro of income tax.
    On top of this, we get ~1100€ / month from the CAF (Family Allocation Fund) in order to support children costs.
    And we are exempted from local taxes (but not from property taxes nor TV tax which is used to fun public TV and Radio and is quite low compared to other countries like UK btw).

    Well, I guess that you may feel that we are being pampered by the government. But still with all this relative benefits we cannot afford to pay for real vacations (for example).

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  4. Anonymous11:07 PM

    I am socialist but I must admit there are so many taxes in France... it's crazy! I remember, when I was a temp for Adecco as a student, I'd work one night here and there and the difference between the salaire brut and salaire net was ridiculous.

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  5. Hi I am Andrew. Also a malaysian. I am visiting Paris form 27th-29th of May. I would like to meet up with a fellow Malaysian and perhaps you can give me some guide etc. Email me at andrewng17@gmail.com

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