The French Prime Minister intends to take around 650,000 low income individuals out of the direct tax net by adjusting the personal income tax thresholds. Taxpayers with income up to around EUR 15,000 would not be paying income tax after these changes are made. These individuals are currently paying tax because the thresholds have not been indexed and have not been moved up in line with inflation.
The phenomenon of taxpayers being brought into the tax net or paying tax at higher rates due to inflation is known as bracket creep, meaning that adjustments to the tax brackets do not keep up with inflation. The French Prime Minister is looking to rectify this problem in the forthcoming supplementary finance bill.
