The reform of the 10% reduction for retirees will make 1.4 million losers, according to the Institute of Public Policy

Small reminder: in the project of Prime Minister François Bayrou who must be examined at the start of the school year in the National Assembly, in addition to the freezing of pensions decided with the famous fiscal “white year”, there is the modification of the 10% reduction from which retirees benefit in the calculation of their taxable income. The measure had been implemented in 1978 to compensate for the professional costs of retirees still having a small activity. Instead of this 10%discount, the Minister of the Economy, Éric Lombard, announced a lump sum reduction of 2,000 euros per retiree – 4,000 euros for a couple – to declare less income to the taxman.

According to the Institute of Public Policy (PPI), this formula to calculate taxable income would be likely to penalize nearly a million and a half people (1,400,000 precisely). The people in question would pay more taxes or simply receive a lesser pension. According to the Institute, the replacement of the 10% reduction by a package of 2,000 euros would ultimately benefit only approximately 100,000 people, or less than 1% of the total retirees. The retirees considered to be the richest would be used without necessarily that the most modest are compensated significantly.

Does that mean that the government would gain in change? Yes, obviously, since it would overall recover more money than today. The hoped for the state would be one billion euros, proof that the reform proposed through the “white year” in 2026 would ultimately result in an increase in taxes. And these are only retirees.

The Institute of Public Policy also underlines that there are several points to clarify, for example whether the method of calculating income giving the right to social benefits would also be modified. We are talking about solidarity allowances for the elderly, housing aid, etc. Enough to fuel lively debates in Parliament from the start of the school year.