French President Emmanuel Macron has declared he will implement tax cuts up to €2 billion, with the focus on the middle class, who have seen their real incomes gobbled up by inflation and economic stagnation.  

Macron hasn’t been the most popular person in France since his ramming through of the new pension reform bill, which raised the retirement age from 62 to 64. Now, as he tries to claw back his reputation, he has announced a plan to cut taxes by up to €2 billion to help improve the purchasing power of the people, who have been slammed by high inflation and pay that doesn’t keep up with the adjusted costs of living.  

These cuts, aimed mainly at those who, as Macron put it, “work hard to try to raise their children but run out of money by the end of the month due to rising costs of living”, have been created to affect the struggling and dwindling middle class.  

NOT EXACTLY AN INCOME TAX DECREASE 

The new policies don’t necessarily mean that income taxes will be going down, and the scheme seems to be in its infancy, with Macron admitting that the government is still looking at different ways to accomplish this lofty goal. Nor did he give a clear timeline except to say that these cuts would be activated by the end of his term in 2027. 

“I don’t want to shut any doors here, there are quite a few intelligent ways [to achieve tax cuts] through [reducing] the social security contributions of employees,” Macron said.   

Though this new plan may be light on detail, Macron’s history of cutting taxes has been good. The Ministry of Economics and Finance revealed €52 billion in cuts during Macron’s first term that included decreases in employee contributions to social security, scrapping the housing tax and TV license fee, and a €4 billion cut in income tax.  

THE MIDDLE CLASS 

Though this plan is not fully hatched, the president did make clear who his target audience was.  

In an interview with French daily L’Opinion published on Sunday, Macron explained his definition of middle class as those whose take home pay was between €1,500 and €2,500 per month, which in real terms is about half the population, according to the National Institute of Statistics and Economic Studies.  

By his standards, this means all the people who live in that area between being too well off to get aid, but not rich enough to be entirely comfortable. This assessment seems to be moveable though, depending on what source is used.  

The Organisation for Economic Co-operation and Development (OECD), for example, has a broader definition of middle class, with up to 68 % of the French population being in this category. Conversely, French economists Thomas Piketty and Lucas Chancel say that only 40% of the population are considered middle class.  

Furthermore, the news may be little more than a diversionary tactic to compensate for the government’s failed attempt to increase wages and to make the bad taste of the pension reform go away.  

The bottom line is that the people may be in for good news or just more “politics as usual”.  

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