Wages: towards a return to tax-exempt overtime

Tax-free overtime was the flagship measure of Nicolas Sarkozy’s five-year term, put in place to unravel the 35 hours. And if the macronists have tabled amendments on overtime, as part of the examination of the text on purchasing power, it is to allow employees to improve their income without paying taxes. But it is also and above all a gesture towards the right: the deputies of the majority seek allies in the National Assembly. Very concretely, they propose to increase the ceiling for overtime and additional hours up to 7,500 euros for the year 2022, against 5,000 euros currently.

In the time of Nicolas Sarkozy, nine million employees had taken advantage of this measure, in particular civil servants and workers. At the time, this had allowed an income gain of 500 euros per year per employee, on average. But the total had cost the state almost five billion euros a year. And it is because of this cost that economists are divided on the measure: tax-exempt overtime hours are a loss of earnings for public finances since these are taxes that they do not collect.

For example, there, the raising of the ceiling would amount to 50 million euros. The other obstacle is that this system benefits employees already in post, so it limits hiring: a boss who has work has an interest in having overtime worked without contributions to the employees he already has, rather than hiring new people. Moreover, it is for this reason that François Hollande, who sought by all means to lower unemployment, had removed the device.

But the unions are not convinced: they believe that this is the same thing as bonuses. Of course, it’s more purchasing power, it’s always good to take, but it’s not sustainable, like wage increases. Tax exemptions deprive the social model of revenue for health, schools, retirement, etc. Despite this reluctance, there is a good chance that this device will be adopted. Even if in the context of the parliamentary debate, the right, which does not want to be bought off cheaply, finds that the ceiling of 7,500 euros per year is still too low.

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