Data Shows Slight Rise In French Tax Burden

by Ulrika Lomas, Tax-News.com, Brussels

10 March 2004

According to the latest data from the French government’s national statistics office, INSEE, the nation’s tax burden showed a modest increase in 2003 for the first year since 1999.

The report indicated that the tax burden increased slightly to 43.9% of GDP, against the previous figure of 43.8% in 2002. Whilst the rise is not huge, it is likely to dismay the French government, given the emphasis that it has placed on cutting taxes for French citizens and businesses. Nor will the timing of the statistics be appreciated by the centre right administration, which is facing a test of public opinion in local elections later in the month.

Analysts have put the increase down to rising tax and social security contributions due to local level taxation. Also, the income tax cut was a relatively small 1% in 2003.

Worryingly for the French government, the INSEE report also puts the spotlight back on the country’s budget deficit, which was shown to have risen by almost 1% to 4.1% of GDP. This is well outside of the 3% maximum stipulated by the EU Stability and Growth Pact rules.

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