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The central right Government of Jacques Villepin has announced plans for the simplification of tax on revenue starting in 2007. There are two major changes in the proposed legislation.

The bands of taxation will be reduced from 6 to 4 (5.5%, 14%,30% and 40%). In addition a ceiling will come into effect to ensure that the total tax paid by an individual including direct taxes, wealth tax and local taxes is not to exceed 60%. Tax will be collected at source with deductions made on a monthly basis from salary payments. The payments are proposed to come into effect for the financial year of 2009. This means that in 2008 tax payers will pay their tax burden for 2007 and in 2009 they will begin monthly payments effectively saving a years tax. This benefit will only be realised in their retirement year where they will not longer be liable for tax due for the previous year.

The motivation is to reduce the general tax burden, bringing France into line with the rest of Europe.


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