Local Taxes To Rise In Paris In 2010

by Ulrika Lomas, Tax-News.com, Brussels

21 October 2009

Mayor of Paris Bertrand Delanoë has confirmed that there will be “a new rise” in local taxes in the French capital in 2010.

Presenting the key budgetary guidelines for the 2010 budget to the Parisian Council, Delanoë emphasized that the 2010 tax increase will not be as dramatic as in 2009, and gave firm assurances that this will be the last rise in local taxes before 2014.

Unable to clarify, however, the precise level of increase in taxation, Delanoë nevertheless confirmed his intention to complete the final arbitration work before end-November.

Yet his assurances come at a time when Parisians have just received their latest tax bills for 2009, showing a 9% increase in the four direct local taxes (residence tax, developed and undeveloped land tax, and local business tax), as well as a new 3% departmental land tax.

Eager to justify the proposed increase in local taxes for next year, Delanoë underlined the fact that the 2010 budget is being drawn up not only in a period of economic uncertainty, but also at a time when future resources for local authorities have not, as yet, been assured.

French local business tax, which currently generates in the region of EUR800m for local authorities in Paris, is to be abolished from January 1, 2010, and replaced with a new contribution, “la cotisation économique territoriale” (CET). Confirming that any losses in revenue arising from the reform will be fully offset for French local authorities by a transfer of tax revenue (to be decided by parliament), the government has recently announced its intention to implement the reform for local authorities from 2011.

The 2010 budget for Paris will be examined in December.

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