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France: France To Pay For Pension Deficit With Higher Payroll Taxes

30 August 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

France is to "preserve" the "heritage" of its pension system by increasing payroll taxes, the Prime Minister has said.

Jean-Marc Ayrault emerged from intensive talks with industry representatives with plans for what he called "responsible" reform.

The deficit in France's pay-as-you-go (PAYG) system is expected to hit EUR20.7bn (USD27.7bn) by 2020. To compensate, employers and employees will have to pay more in contributions, with rates to rise by 0.3 percent in 2017. This will equate to roughly EUR4.50 a month for a worker on the minimum wage.

Many will also be affected by what effectively amounts to a change in the retirement age. The minimum number of contribution years required for a worker to receive a full pension will rise from 41.5 years to 43 years by 2035.

"It will lead little by little to a rise in the effective age of retirement and it is because of this that this is a major structural reform," Ayrault said.

The initiative was immediately condemned by Pierre Gattaz, head of France's employers' confederation. He called the reform "dangerous" and unacceptable, telling Le Figaro that "all the Government does is tax and then tax some more."


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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