Withholding tax: what will change for the taxpayer

THE ECO SCAN – Michel Sapin indicated that the implementation of the withholding tax on income should be part of a collective budget planned by the summer. Explanations of what could change for taxpayers.

According to the definition of INSEE, withholding tax corresponds to “a method of tax collection consisting in having its amount withdrawn by a third party payer, most often the employer or the banker, at the time of payment to the bank. taxpayer of the income to which the tax relates ”. Thus, no more tax would be levied once the net salary is affected. What does this change concretely for the individual?

• No simplification

Between dematerialization, the pre-filled sheet and monthly payment, the tax administration has already made it easier for the taxpayer. Some 66% of taxpayers paid monthly in 2014 and payment is made electronically in 80% of cases. The withholding tax will not change much from this point of view. Indeed, the taxpayer will have to continue to report changes in personal situation and “complete his declaration of the contributory act”, recalls Vincent Drezet, secretary general of Solidaires Finances publique. According to the Council of compulsory levies (CPO), the steps for calculating the tax depend on the complexity of the tax and not on its method of payment.

• Elimination of taxation delayed by one year

“A levy on current income would allow a more immediate synchronization of the tax to changes in income”, we can read in the CPO on income tax (IR) and generalized social contribution (CSG) published in February 2015. Taxpayers could adapt their consumption in real time and their savings to changes in income without suffering an additional backlash the following year. However, there are already “mechanisms to pay taxes in advance or adjust the levy that is operated in advance with the tax administration.” These mechanisms are however little known or little used because they are conditioned on a justified demand ”, continues the report on the IR and the CSG.

• A difficult transition

In the year this measure is implemented, would taxpayers pay their taxes twice? “”, Slice the deputy PS, Dominique Lefebvre, vice-president of the finance committee of the Assembly. Conversely, the State cannot deprive itself of a resource of 70 billion euros. Hence the plan to smooth this transition over time. This could be confusing for those who would change employers or even their personal situation in the meantime.

• Tensions in the company

In order to be able to deduct at source, the tax administration would communicate personal data to employers. “The employer will know more or less the personal situation of the employee”, comments Jean-Philippe Delsol, tax lawyer and president of the Institute for Economic and Fiscal Research. In its decision n ° 2012-652 of March 22, 2012, the Constitutional Council ruled that the right to respect for private life implies that “the collection, recording, conservation, consultation and communication of personal data are justified by a reason of general interest and implemented in an adequate and proportionate manner to this objective ”. In addition, “the amounts collected by companies may not be returned: fraud, cash flow requirements, etc. As is already the case for VAT, ”says Vincent Drezet.

• Some inequalities

Two employees occupying the same position could then receive a different net salary, due to their personal situation. The employer knowing important information on the private life of the employee, in particular the bracket in which it is located, could it use these elements during salary negotiations? “It is a risk that must be identified”, replies Vincent Drezet.

• The painless tax

“This measure will make tax ever more painless, just like VAT. It is an indirect means of strengthening the welfare state and relieving the French of responsibility. As a result, we have less and less discernment and awareness of the cost of the public service, so we use more ”, launches Jean-Philippe Delsol.

• Questioning of the CSG

The merger of CSG and IR is mentioned. “Its supporters want to take back the base of the CSG because it is simple, without tax loopholes and broader. However, they suggest using the progressive IR scales, ”explains Vincent Drezet. However, this idea would be technically too complicated to implement by 2017.