Macron Signals Historic French Income-Tax Change May Be Delayed

(Bloomberg) -- French President Emmanuel Macron said he wanted “precise answers” before deciding whether to introduce pay-as-you-earn income tax withholding as planned next January.

Speaking at a press conference in Helsinki, Macron said he wanted to be “demanding about the proper implementation” of what would be a major change for employers and workers.

France is one of the few advanced economies that doesn’t impose income tax on the current year, instead calculating it on the previous year’s earnings and allowing taxpayers the choice of paying every month or three times a year. Previous governments have announced their intention to introduce withholding, only to abandon the effort because of the complication involved in switching from one system to the other. The U.S. has withheld income tax since 1943.

“If I hadn’t thought we shouldn’t do this reform, I’d have decided to abandon it a year ago,” Macron said Thursday alongside Finnish Prime Minister Juha Sipila. “I’ve asked the competent ministries to give all the answers. I have to be sure what our citizens will experience the day it’s put in place.”

Macron said it was too early to say whether he’ll decide on a delay. Budget Minister Gerard Darmanin said Wednesday there wouldn’t be a delay, after the Le Canard Enchaine newspaper reported that computer bugs and bureaucratic problems meant a January introduction was unlikely.

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Asked by CNews about Macron’s comments, Darmanin said there “was nothing extraordinary” about the president seeking more information, and that the reform was on track.

Business groups such as the Medef employer federation say companies need more time to prepare for the switch, since for they’ll responsible for collecting their employees’ taxes for the first time.

A YouGov poll released June 4 suggested 60 percent of the French view pay-as-you-earn as making their lives easier, though 60 percent also said it would allow employers to know more about their financial situation.

Income tax in 2017 yielded 74 billion euros ($85 billion) for the French state, or about 11 percent of general government tax revenue. Value-added tax is the largest source of funding for the French government.

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Tony Czuczka

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