The return of an old moon? As the government prepares, with the results of the spending reviews, to enter into the hard part of budgetary discussions for 2025, no savings avenue can be ruled out. The executive, on the other hand, promises, despite the impossible financial equation, not to touch the revenue side. He even committed to continuing to reduce taxes but also to alleviate the pain for households. “We will have, among other things, in our financial trajectory, 2 billion tax cuts on our compatriots who are in these categories (of the middle class, Editor’s note) in 2025,” said Emmanuel Macron, during his press conference from mid-January.
In the context of an economic slowdown, meeting these ambitious commitments will be a challenge. Whether it succeeds or not, the executive should at least fight to maintain the red line imposed since 2017 by the Élysée: taxes on the wealthiest will not increase, despite pressure from the left fringe of the majority . Emmanuel Macron, so fluid on so many subjects, has remained inflexible on this line, since the transformation of the ISF into the IFI during his first finance law. However, there is no shortage of ideas for increasing the tax base. An article published in an INSEE journal (1) thus attempts, so far without success, to rekindle the debate on the non-taxation of fictitious rents.
The authors thus recall that from 1914 to 1965 the French state imposed these “rents that owners occupying their accommodation would have to pay if they were tenants of the property”. Taxation was suspended during the Trente Glorieuses in order to encourage the emergence of a middle class of owners. While the debate on wealth inequalities has intensified in recent years against a backdrop of explosion in real estate prices, these economists have estimated the amount of net imputed rents at “7% of net national income, their non-taxation constituting hidden tax expenditures of up to 11 billion euros per year. They also recall that certain OECD countries, such as Iceland, Luxembourg, the Netherlands, Slovenia or Switzerland, still include these fictitious rents in their tax base and treat the imputed rents like any other income from capital”.
The article gives new life to an idea that has long agitated the PS. The economist Gilbert Cet, recently appointed head of the Pension Orientation Council, also noted in a recent article in Les Échos that taxation of fictitious rents could facilitate professional mobility. An owner-occupier actually loses out if he rents out his property to become the tenant of a new home near his new job because he finds himself taxed on the income that his tenants pay him while paying for it himself. of rent.
Also read: This study intends to relaunch the idea of taxing the fictitious rents of owner-occupiers
The economist, well aware of the low probability of seeing such a measure adopted, nevertheless recalls that this reform “would call for other changes, such as the merger of this new tax with other existing taxes on real estate property, such as the IFI or property tax.” As real estate continues to sink into crisis, such a reform would risk putting a further brake on transactions, already in a marked slowdown, and in turn could further freeze construction. It would especially be politically explosive within the highest taxed country in the OECD, and while purchasing power remains the primary concern of the French, according to all surveys.
The imposition of fictitious rents mainly refers to the idea that households do not really own the accommodation they occupy. In a country where the dream of ownership remains alive, with 60% of metropolitan households owning their primary residence, such a message is inaudible.
The concept of imposing fictitious rents had its heyday during the five-year term of François Hollande. In 2013, a note from the Economic Analysis Council (CAE), a think tank dependent on Matignon, expressed this view. “Always with the aim of reducing inequalities in tax treatment, we recommend rebalancing taxation towards real estate by taxing implicit rents net of loan interest,” the CAE then indicated. A little earlier, an essay by Thomas Piketty, Emmanuel Saez and Camille Landais already supported the principle. If the idea resurfaces at regular intervals, for the moment, the executive is resisting, faithful to its course of not increasing taxes.
(1) “The non-taxation of imputed rents: a gift for Harpagon? An estimate in the case of France”, by Montserrat Botey and Guillaume Chapelle, “Economy and statistics”, 2023.
