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OECD Urges On French Tax Reform

by Lorys Charalambous,, Cyprus

14 September 2017

The OECD's latest Economic Survey of France has identified tax reform as a priority for the French Government as it attempts to boost the nation's economic growth prospects.

The Survey, presented in Paris on September 14 by OECD Secretary-General Angel Gurría and French Minister of Economy and Finance Bruno Le Maire, said that tax policy should favor job creation, productivity, and a more "inclusive" labor market.

According to the Survey, a large tax burden is required to support public spending in France, which, at 56.4 percent of gross domestic product (GDP), is the highest rate of spending as a proportion of GDP in the OECD. This, it said, imposes "heavy economic and social costs" on France.

"A long-term strategy is needed to reduce public expenditure, ensure debt sustainability and make room for further tax cuts and a simpler tax system, while safeguarding a high level of social protection," the OECD said, adding such a policy would help job creation and investment.

The Survey also said that reducing taxes on low wages and capital income were "particularly important." These could be paid for, the OECD argued, by base-broadening measures, the removal of tax breaks on capital income, making the personal income tax system more progressive, removing personal income tax exemptions, and more environmental taxation.

Last month, Le Maire confirmed that the Government will legislate for several tax measures designed to increase France's tax competitiveness in the upcoming Budget for 2018.

In a speech to France's main employers' union, MEDEF, on August 30, Le Maire said that the Government would proceed with several major tax proposals, including a corporate tax cut, the abolition of the ISF wealth tax, the replacement of the competitiveness and employment (CICE) tax credit with cuts in compulsory levies, and the simplification of capital gains tax.

TAGS: environment | Finance | tax | investment | gross domestic product (GDP) | Organisation for Economic Co-operation and Development (OECD) | environmental tax | France | tax breaks | tax reform | Economy

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