Local Taxes In France Soar In 2009

by Ulrika Lomas, Tax-News.com, Brussels

05 October 2009

Following two years of moderate changes to local taxation in France, the country’s local authorities have once again turned to their faithful tax wand, in a desperate bid to magic up much needed additional revenue.

Announced several months ago, plans to increase local taxes in France are about to become a painful reality, as taxpayers wait anxiously for their bills.

According to a survey published in April by the Forum for the management of local authorities, the average increase in the rates of taxation will be 6.2%.

Local tax in France comprises a residence tax (la taxe d’habitation), levied on the occupier of a property, and determined by local and county councils, and an annual land tax (la taxe foncière), imposed on the owner, irrespective of whether or not the property is actually occupied by them, or rented out. Land tax in France varies considerably from one region to the next, as it comprises three independent and widely varying elements: a regional, a departmental, and a local tax.

Regarding residence tax, the survey notes that the greatest increases have been in Nice, where the tax has risen by 17.7%, in Argenteuil, which shows a 12.3% increase, and in Grenoble, with a rise of 11.9%.

As regards land tax, the survey reveals that the biggest increase has been in Paris, where land tax is up by 47%. Land tax has risen by 16.5% in Nice, and by 14.3% in Nantes.

The overall rise in local taxes may come as somewhat of a surprise for taxpayers, given the government’s repeated assurances to the contrary. Indeed, France’s Budget Minister Eric Woerth has expressed his outrage at the decisions, emphasising that the rises in local taxes are not consistent with current government policy.

Defending their actions, however, local MPs explained the need to increase tax revenue, reporting that the amount of transfer tax has dwindled as a result of a decline in property sales, and that spending has increased.

Olivier Régis of the Forum paints a different picture altogether, however, revealing that increases in local taxes are closely linked to the election calendar. At the beginning of a mandate, he adds, MPs have a tendency to increase the tax burden imposed on taxpayers, in the knowledge that as the elections approach, this will become increasingly harder to do.

Individual households have until October 15 to settle their land tax bills, and until November 16 to pay their housing tax.

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