French Income Tax Cuts Cancelled Out By Hikes In Other Levies, Say Economists

by Ulrika Lomas, Tax-News.com, Brussels

03 November 2004

Despite the French government’s efforts to cut income tax since winning power in 2002, increases in local taxation and social levies have meant that the tax burden on French households has actually risen over the last three years, economists have calculated.

The politically independent group of economists known as CEPAP, drawn from the banking industry, academia and the public sector, has concluded that the net tax burden on the nation’s households has increased on aggregate by €1.5 billion, based on a study of budget bills from 2002 to 2005.

Whilst income tax on households has fallen by €5.9 billion as the government attempted to carry out President Chirac’s 2002 election pledge to cut income tax by a total of 30% in five years, the benefit has been more than cancelled out by social levies which have increased by €5.7 billion, according to CAPAP. Increases in other taxes brought the net figure to a €1.5 billion increase in tax.

"Overall, the sum of the different decisions regarding taxes on households does not reflect the objective of reducing these taxes," observed CEPAP in a statement.

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