France remains in first place in the euro zone, says a study by Fipeco.
The observation is known, and it is confirmed from year to year. In Europe, France remains one of the countries in which compulsory levies are the highest. It even rises to the top of the ranking in the euro zone, and in second place in the EU – behind Denmark -, according to a study by the specialized site Fipeco, published on Tuesday.
This work is based on Eurostat data, and reveals strong disparities between countries. In total, in 2021, the rate of compulsory levies in France – which includes taxes, duties and social security contributions – represented 47% of GDP, according to Eurostat. That is 4.8 points more than the euro zone average (42.2%) and 4.6 points more than Germany (42.4%). However, France remains 1.8 points below Denmark, whose rate is 48.8%.
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However, the gap between France and the other European countries is narrowing. “These gaps have decreased compared to 2020 when they were 5.9 points with the euro zone and 6.4 points with Germany“, notes the study of Fipeco, site founded by François Ecalle, former magistrate at the Court of Auditors and expert in public finances. The tightening is even more significant if we look at the figures for 2017: the gap was 6.9 and 7.6 points respectively at the time.
Significant taxes on consumer products
In detail, if France remains above almost all of its European neighbors, it is largely due to the taxes on production that the State collects. “Taxes on production, which form a heterogeneous set, remained the main source of the difference between the rates of compulsory levies in France and in the euro zone in 2021“, notes Fipeco. They represented 4.5% of GDP in France in 2021, i.e. 2.2 points more than the euro zone average, and 3.5 points more than Germany.
At the same time, the fall in these taxes on production – they represented 5.2% of GDP in 2020 – largely explains the fiscal convergence between France and its European neighbors. Lower corporate income taxes in 2021 – now “of the same order of magnitude as that of the other countries of the euro zone», notes Fipeco – is the second factor.
The study by the public finance information site also notes that France remains quite well above its European neighbors regarding taxes on consumption: 12.3% of GDP in 2021 compared to 11.1% in the euro and 10.1% in Germany. “This is due relatively little to VAT, the weight of which was only slightly higher in France (by 0.2 points compared to the average for the zone), and much more to taxes specific to particular products (difference of 1. 0 point of GDP with the euro zone average): energy, tobacco, alcohol, insurance, etc.“says the study.
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As for taxes on household income, their weight increased in France with the increase in the CSG in 2018. It is now at a level comparable to that of the European average (9.4% in France against 9.7% in the euro area). “However, income tax in the strict sense remains much lower in France (3.3% of GDP)», points out Fipeco. Finally Yes “the weight of social security contributions has decreased significantly in France in recent years», it continues to explain a significant part of the tax gap between France and the rest of the euro zone (1.3 points). Note that it is now much lower than that of Germany (15.5% against 17.6%).
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