This paper examines the reforms to taxation and transfers affecting households introduced by the 2019 Budget, including the most recent measures announced in the wake of the ‘Gilets jaunes / yellow vests’ movement.
The results indicate an average gain of close to 1 per cent of disposable income for a large proportion of households, mainly those receiving the activity bonus and households affected by the reduction in the Residential/local housing tax. We also analyse the effects of the reforms implemented since the start of the five-year term, i.e. the cumulative effects of the 2018 and 2019 budgets. The average gains across the entire population are qualitatively similar, but mask significant heterogeneity. Those in work benefit on average, regardless of their income percentile (+2.4 per cent in disposable income on average). Pensioners in the top 20 per cent of households are seeing their disposable income reduced, with an average loss of 3 per cent. The top 1 per cent of households, regardless of their employment status, see their disposable income increase by an average of 6.4 per cent as a result of the replacement of the solidarity tax on wealth (ISF) with the property wealth tax (IFI).
The initial provisions, proposed by the government in September 2018, were significantly amended by the emergency economic and social measures. These play an important role in the final redistributive effects. All income categories benefit from these new measures, with an average impact of 0.8 per cent of disposable income. These effects are most pronounced between the 15th and 49th percentiles of living standards, with an average gain of 1.2 per cent.
