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France Planning EUR14bn In Tax Cuts By 2017

by Ulrika Lomas,, Brussels

20 June 2014

The Responsibility and Solidarity Pact and the tax credit for competitiveness and employment (CICE) will cut companies' liability to compulsory levies by EUR14bn (USD19bn) between 2015 and 2017, according to estimates from the French Court of Auditors.

In its June 17 report on the public finances, the Court said that while the Pact and strengthened CICE rebate provide total tax relief worth about EUR35bn over the next three years, the Stability Program raises levies by EUR21bn over the same period.

The pact proposes to reduce employers' contributions (worth EUR10.5bn), remove the corporate social solidarity contribution (C3S) (EUR6bn), abolish the exceptional contribution on large companies and lower the standard rate of corporation tax (EUR5bn), cut low earners' payroll contributions (EUR2.5bn), and lower income tax for modest income households (EUR2.5bn).

Meanwhile, the Stability Program raises the nation's climate energy contribution (EUR3bn) and public service contribution on electricity (EUR3bn), replaces the heavy goods vehicle tax (EUR1bn), and hikes local tax rates (EUR4bn) and retirement insurance contributions (EUR2bn).

The Court called into question the Government's budget predictions in its report. It said the Government had overestimated revenue collection by an average of EUR4bn annually between 2003 and 2013 (with the exception of 2009), and underestimated public spending by EUR5bn.

It warned that the Government will miss its 3.8 percent of gross domestic product (GDP) public deficit target for this year, and subsequently fall short of its 3 percent objective for 2015.

The Court's findings are likely to fuel parliamentary debate on what should be included in the supplementary finance bills for 2014.

TAGS: tax | energy | vehicle tax | insurance | gross domestic product (GDP) | retirement | budget | corporation tax | payroll | tax credits | tax rates | social security | France | tax breaks | individual income tax

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