Thursday, 20 January, 2022

Production taxes: the second opinion of local elected officials in the face of employers’ demands


In a note, the Association of Mayors of France responds to the employers’ arguments on local business taxation. Local elected officials believe that a reduction in production taxes would in no way reduce the competitiveness gap with Germany.

The Association of Mayors of France puts into perspective the role played by local taxation in the competitiveness gap between France and its neighbors.

It has been two years since the representatives of the industry made their diagnosis on production taxes, this set of 70 billion euros of levies that they consider harmful for the competitiveness of French companies. While the government has promised a reduction in these taxes in the next finance bill, local elected officials have made their own diagnosis, in which they challenge point by point the arguments of industrialists.

In this note, consulted by “Les Echos”, the Association of Mayors of France puts into perspective the role played by local taxation in the gap in competitiveness of France with its neighbors. “It is above all social contributions that penalize French companies compared to their German competitors”, defends Philippe Laurent, its general secretary.

Read also:

Local authorities block any reduction in production taxes

Social security charges

If we add up the production taxes collected by the State (State TICPE, C3S, payroll tax), we reach an amount of 393 billion euros, or 16.8% of GDP. By comparison, the total of local corporate taxes (TICPE of communities, property tax, CFE, CVAE, transport payment, etc.) amounts to 62 billion euros, or 2.5% of GDP.

“When we see the weight of social charges for companies [NDLR, 369 milliards d’euros], I refuse to consider that the 8 billion property contribution from companies is essential for competitiveness ”, abounds Franck Claeys, local economy and finance director at France Urbaine.

Read also:

Local taxation weighs more and more on companies

Based on Eurostat data, the weight of local government levies in GDP is even lower than the European average, according to this note. If we continue with this reasoning, it would therefore not be local taxes that would make France the European champion in compulsory deductions. Note that these European comparisons can be misleading, especially with Germany, where the portion of corporate tax allocated to communities is sometimes counted as a local tax, sometimes as a corporate income tax.

Attractiveness factor

Finally, local elected officials argue that taxation is not the first factor of attractiveness for a location decision. Other elements play a key role such as land supply, local aid to businesses, the existence of business incubators, good infrastructure, etc. So many public services which, precisely, are financed by taxes.

According to them, the reform of the professional tax did not slow down the difficulties of French industry after the crisis. And the AMF, in this note, asks the question: “Should local communities be the variable for adjusting strategic errors in the industrial sector?” “

In a note, the Association of Mayors of France responds to the employers’ arguments on local business taxation. Local elected officials believe that a reduction in production taxes would in no way reduce the competitiveness gap with Germany.

The Association of Mayors of France puts into perspective the role played by local taxation in the competitiveness gap between France and its neighbors.

It has been two years since the representatives of the industry made their diagnosis on production taxes, this set of 70 billion euros of levies that they consider harmful for the competitiveness of French companies. While the government has promised a reduction in these taxes in the next finance bill, local elected officials have made their own diagnosis, in which they challenge point by point the arguments of industrialists.

In this note, consulted by “Les Echos”, the Association of Mayors of France puts into perspective the role played by local taxation in the gap in competitiveness of France with its neighbors. “It is above all social contributions that penalize French companies compared to their German competitors”, defends Philippe Laurent, its general secretary.

Read also:

Local authorities block any reduction in production taxes

Social security charges

If we add up the production taxes collected by the State (State TICPE, C3S, payroll tax), we reach an amount of 393 billion euros, or 16.8% of GDP. By comparison, the total of local corporate taxes (TICPE of communities, property tax, CFE, CVAE, transport payment, etc.) amounts to 62 billion euros, or 2.5% of GDP.

“When we see the weight of social charges for companies [NDLR, 369 milliards d’euros], I refuse to consider that the 8 billion property contribution from companies is essential for competitiveness ”, abounds Franck Claeys, local economy and finance director at France Urbaine.

Read also:

Local taxation weighs more and more on companies

Based on Eurostat data, the weight of local government levies in GDP is even lower than the European average, according to this note. If we continue with this reasoning, it would therefore not be local taxes that would make France the European champion in compulsory deductions. Note that these European comparisons can be misleading, especially with Germany, where the portion of corporate tax allocated to communities is sometimes counted as a local tax, sometimes as a corporate income tax.

Attractiveness factor

Finally, local elected officials argue that taxation is not the first factor of attractiveness for a location decision. Other elements play a key role such as land supply, local aid to businesses, the existence of business incubators, good infrastructure, etc. So many public services which, precisely, are financed by taxes.

According to them, the reform of the professional tax did not slow down the difficulties of French industry after the crisis. And the AMF, in this note, asks the question: “Should local communities be the variable for adjusting strategic errors in the industrial sector?” “