Are The Tax Loopholes For Retirees In France Coming To An End? A Measure That Is Sparking Debate

The global economy is teetering, and France is no exception. Between rampant inflation and budget deficits, room for maneuver is shrinking. Inspired by models such as those of Argentina or the United States under Donald Trump, some advocate for cuts in public spending. Patrick Martin, president of Medef, proposes a shocking measure: to eliminate the tax deduction of 10% for retirees. An idea that raises eyebrows in both cottages and bridge clubs.

Medef at war against tax loopholes

In a France battered by a political crisis, Patrick Martin did not mince his words: ” We are addicted to public spending.” For him, this tax deduction is a relic of a bygone era. Introduced in 1945, it aimed to compensate for the residual professional expenses of retirees.

Today, this loophole costs a lot: 2 billion euros per year, according to the Pension Orientation Council (COR).

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What arguments does Medef put forward?

• An unequal device: Wealthy retirees benefit more than modest ones;
• An important cost: In times of deficits, every euro counts;
• An anachronism: Social aid has evolved, making this advantage less justifiable.

For Patrick Martin, this elimination would be a fairer alternative than freezing pensions. However, retirees’ associations are raising their voices, seeing it as a direct attack on the purchasing power of the most vulnerable.

” A tax loophole for professional expenses when you no longer work? It’s like giving skis to a fish!” would joke a unionist. But humor is not enough to hide the concerns.

Retirement: a divisive reform

The elimination of the tax deduction could push 500,000 retired households into taxation, according to some economists. Take the example of a couple earning 1,662€ each per month: their tax would increase from 682€ to 1,320€ annually.

This tax shock worries unions, such as the Confederal Union of Retirees (UCR), which denounces an unfair measure.

Criticism also pours in from experts. Although the Pension Orientation Council pointed out the high cost of this deduction, it has never called for its elimination. Why? Because this provision mainly benefits intermediate retirees, a category often overlooked in tax reforms.

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If this proposal divides, it is also because it affects an already fragile segment. Modest retirees would be spared, but those with intermediate incomes would see their situation worsen. Yet, these households make up the majority of beneficiaries.

The government, for its part, remains cautious. François Bayrou has not yet commented, but budget margins are tightening. The tax deduction could very well become a mere memory.

An economy in search of solutions

The debate far exceeds the question of pensions. For Medef, the stakes are broader: how to revive a French economy under pressure? With a public deficit flirting with 4% of GDP, the comparison with countries like Italy is striking. Where our transalpine neighbors have reduced their deficits by cutting spending, France is still hesitating.

Patrick Martin calls for a “regime” for the State: less social spending and a reform of mandatory levies. The idea of a social VAT is resurfacing, as is the idea of broadening certain tax bases.

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But the balance is delicate. Reducing aid too much could exacerbate social tensions, while increasing taxes could hinder economic recovery.

Finally, Medef’s proposals come within a global context marked by the rise of the Chinese yuan and the persistent influence of the United States. Between Donald Trump demanding hardline policies and China imposing itself on the economic stage, France will need to find a balance.

For Martin, the time has come to react: “We can no longer hide“, he says.

Thus, the future of French public finances seems suspended on crucial choices. Simplify, reform, cut: these are verbs that resonate in political and social arenas.

A wind of innovation is blowing through the tax landscape. The entry of bitcoin into French retirement savings, through partnerships like that between VanEck Europe and Inter Invest, opens new perspectives. A breath of fresh air for seniors in search of solutions in the face of an uncertain fiscal future.