The idea of capping property tax increases reappears.

Will the owners, just like the tenants, be eligible for a bonus to help them deal with the effects of inflation? The members of the National Assembly have expressed their support for the proposal. An amendment to the Finance Bill of 2023 that moves in this general direction was approved for adoption by the elected representatives of the Republic. The goal of this bill, which was introduced by 19 representatives and received support from three members of the presidential majority, is to impose a ceiling on the increase in the property tax, which is now tied to inflation.

If nothing is done, this local tax that is paid by 32 million taxpayers is likely to increase from 6% to 7% in 2023, says Jean-René Cazeneuve, who is a deputy for the Renaissance party and the rapporteur general of the budget in the National Assembly. This is because consumer prices have been rising at an alarming rate. Not to mention the rise in value that the municipalities could add to the newly reassessed base. Because of this, the rate of property tax will be 13.1% higher in Marseille in 2022, 11.6% higher in Tours, 9% higher in Strasbourg, and 8% higher in Nantes. This is what the people who drafted the amendment to refer to it as an “increased tax burden” or “hardly sustainable for taxpayers” respectively.

Because landlords are already subject to penalties due to the cap placed on the amount by which rents can increase, this blow would be all the more difficult for them to stomach. Bruno Le Maire, the Minister of Economy and Finance, had indicated at the end of June that the latter will not be permitted to climb by more than 3.5% in one year. Christophe Demerson, president of the National Union of Property Owners, who are aware that tenants may have problems paying their rent, asks, “Why is the increase in rentals restricted and not that of the property tax?”

As a result, to compensate for this loss of income on income that was used to service the mortgage of certain owners, the deputies imposed a cap on the increase in the property tax that was set at +3.5% (and at +2.5% overseas). When the amendment is debated during a session of the National Assembly, it remains to be seen whether the elected members of the Assembly will take the same approach. “This tax fairness measure will help protect the purchasing power of households,” comment the signatories of the amendment, who have provided for steps “to prevent it from damaging local finances.” In other words, “this measure will help preserve the purchasing power of households.” Even if the government claims that the shortfall is compensated to the nearest euro, local authorities would indeed take a dim view of the fact that their property tax revenues will also be cut if they were deprived of revenue from the housing tax, from which all households will be exempt in 2023. This exemption is scheduled to take place in 2023.

After initially considering imposing a cap on the growth in property tax in the 2023 Finance Bill, Bercy ultimately decided against doing so in response to pressure from the various municipalities. This pressure caused Bercy to abandon the idea. This points to the government having an unfavorable opinion during the session in which the amendment is being examined, which is not ideal. “When approached by Le Figaro, the entourage of Bruno Le Maire stated that Bercy does not comment on the work that is being done in the committee of deputies.

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