Withdrawal at the source: why does the manager postpone

The executive power seems to have less and less confidence in the implementation of the withholding tax reform for technical, political and psychological reasons.

After months defending the reform of the withholding tax on income tax, the executive doubt. The Minister of Economy, Bruno Le Maire, confirmed on Sunday 2 September at BFMTV that the performance calendar will be held, but "if and only if the technical guarantees are met". And that is where it is rubbing.

Saturday The Parisian revealed the alarming results of the test phase of the withholding tax. If the government is reassuring, the end of the reform mentioned by the President of the Republic will no longer be ruled out by Gérald Darmanin, the Minister of Action and Public Accounts, who has been on the file for several months. Franceinfo has identified the obstacles to the implementation of this emblematic reform.

The fear of technical problems?

"The technical device is working, it's done!", Gérald Darmanin assured, on Saturday night, on Twitter. But the revelations of the Parisian, published a few hours earlier, shows that the case is not that simple. According to a confidential document from the tax, to which the newspaper had access, the device was far from being perfected during the tests of the last months. For example, more than 350,000 errors were identified in February 2018. From month to month, the number of anomalies varies from worst to best. For example, no anomalies were found in June, when they reappeared in July and August.

How do you know in these circumstances whether the month of January will be a good month or a bad month? Gerald Darmanin ensures Saturday on Twitter "identified errors […] have been solved ".

The two main technical errors we encountered are duplicates, which could be The Parisian, leading to multiple admissions (which the ministry denies) and sampling errors with homonyms. Especially the lack of operating equipment is mentioned in the document. Although the reform has been postponed for a year and should come into effect in January 2019, employers did not update their payroll software. Many nominative social statements (DSN), sent by companies to the tax authorities, are full of mistakes and ensure The Parisian.

Technical problems of which the President of the Republic is aware. "I need a number of very specific answers, he said Thursday, August 30. It is a complex reform that requires a lot of work. " The date of 15 September was set as a limit by the executive power to take a decision on the subject. Fifteen days to solve these technical problems and convince the head of state not to abandon the reform.

The fear of a political defeat?

The opposition is crying out for political reasons. "Technical problems – I do not believe it for a second", the former Minister of Finance, Christian Eckert, who started the reform under François Hollande, wipes with release.

This whole story is only a political matter.Christian Eckert, former secretary of state for the budgetat "Liberation"

"These technical bugs, which come from nowhere, have good backs to prepare the mind for a retreat, […] not technical, but political "Jean Francois Cope, former minister deputy for the budget, told franceinfo. Beneficial to the reform, which it judges "very well", The mayor The Republicans of Meaux say that the tax office is "perfectly able to put all this in place".

Is the problem political, technical or both? The reform of the withholding tax always comes to a stop between the president and his minister of government accounts. On the one hand Gerald Darmanin does not want to come back, he who spent a lot of time explaining the reform, for example during a long interview in The JDD, in April.

On the other hand, the president has a negative image of the political consequences of a possible fiasco during the implementation of the reform, planned for next January. Because the reform concerns 38 million tax households and the majority fears to pay the application of the measure in the ballot box. The European elections, the first elections since Emmanuel Macron's arrival in the Elyseepaleis, are planned a few months later, on May 26, 2019.

The fear of a psychological effect?

Another problem is that the withholding tax automatically reduces the number at the bottom of the pay slip. For some analysts, the change will be difficult to pass on to the French.

The psychological effect of the levy at source will be brutal.Philippe Nemo, author of "Tax Philosophy"on the point"

For some, this effect on home psychology will also penalize growth. "Since the growth engine in France has always been consumption, we risk waiting behavior, believes the Republicans Gilles Carrez, questioned by France 2. Psychologically there can be a sense of loss of purchasing power, Is full of the Parisian Cendra Motin, LREM MP from Isère. This should not be the case at the transition to the euro when household consumption has fallen."

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