Political news in France is focused on the preparation of the 2027 budget, in the run-up to the next presidential election and in a context where the general rise in interest rates is affecting public finances already degraded by heavy debt. The stabilization of the deficit at around 5% of GDP in 2026 is not a given due to an unstable international environment that weighs on growth and new spending required by the consequences of the weather events that occurred this summer.
If we put aside the project of cancelling part of the debt that would make France look like Venezuela, the debate between the candidates can be summed up in an increase in taxes on the richest and on large companies for some and a reduction in the various social protection expenses for others. At no time has a reflection been launched on the nature of the tax system and on taxation to ensure that they are well adapted to today's world.
This system is mainly based on VAT, created in 1950, and then adopted by many countries, with the exception of the United States, on the taxation of household income (created in 1920) and corporate profits, and on contributions levied on wages, introduced when the Welfare State was created in the aftermath of the 2nd World War. But in a century, France has changed a lot. The French are now much richer, even if this wealth remains insufficiently distributed. Large companies are multinationals. Finally, France became a member of the European Union and adopted the euro.
These transformations have taken place without any analysis of the consequences in terms of taxation and social security contributions. The first subject concerns VAT. The idea was launched to increase it by creating a "social VAT" whose revenues would make it possible to reduce social contributions and reduce the deficit of the various branches of Social Security. This measure is criticized because it would cause price increases and therefore a decrease in purchasing power. In addition, it would not contribute to the reduction of the budget deficit or that of local authorities.
These analyses must be deepened. In highly competitive sectors such as mass distribution, the automotive industry or household appliances, it is not certain that the increase will be fully passed on. Households would then see their purchasing power only slightly impacted. Conversely, if the revenues allow for a reduction in social security contributions, it is not at all certain that companies will proceed with regular wage increases on the pretext that they will have already benefited from the reduction in contributions. Moreover, each time the State has reduced rates, the repercussions on consumers have only been partial, with companies taking advantage of this to increase their margins.
VAT is an essential element of French taxation, but its use must take account of the behaviour of economic agents, which leads to the rejection of the concept of social VAT. On the other hand, there is nothing to prevent the State and local authorities from deciding to increase rates, provided that they make significant savings each year on their operating expenditure.
An equally important reform must be carried out with regard to the taxation of property. Historically, it had an essentially political meaning, "to make the rich pay". The abolition of privileges during the Revolution, the denunciation of the "200 families" during the Popular Front and even the introduction of the Tax on Large Fortunes in 1981 are part of this logic. Some candidates are even proposing today to cap inheritances. Over the years, the criticism has always been the same: by taxing success, we scare away their authors and by stigmatising it, we weaken the country. It is not unfounded.
The logic of taxation must change. A significant part of the State's expenditure is intended to protect people but also property. This is the mission of the Ministries of Defence, the Interior and Justice. In addition, many public investments generate an increase in the value of properties located nearby, this is the "TGV effect". Finally, the State's action can sometimes contribute to the increase in the market capitalisation of a company whose first beneficiaries will be its shareholders.
However, a significant part of the population does not have property. Why should these households, by paying tax, contribute to financing the protection of the property of those who own it? It would therefore be perfectly justified for the direct taxation paid by households to no longer be based solely on their income, even if it means reducing rates and progressivity, but also on their assets. The value of these amounted to more than 9000 billion euros in 2025. There is nothing to prevent us from also thinking about the introduction of a progressive scale on inheritances.
A third reflection should focus on the reduction of tax sieves. When we discover that PEAs, which had been introduced with advantages to encourage households to invest their savings in shares of French and then European companies, can also accommodate hedge funds operating on markets outside the Union and that the State renounces to go back on this advantage, we wonder.
Similarly, the extension of the tax exemption for donations, which consists, since it generates a loss of tax revenue, in making others pay for personal choices in favour of a cause, is excessive. The incentive to give is a good thing, but it must be accompanied by a real effort on the part of the donor and not to allow him to dispense with it for the most part.
Finally, France must no longer accept that countries of the European Union have tax practices that consist of diverting the profits of companies from their soil in an artificial way. As the establishment of the list of tax havens by Brussels must be approved unanimously, it is not surprising that neither Luxembourg nor Ireland are included. However, the former has specialized in "letterbox companies" whose sole purpose is, for example, to collect the remuneration of patents filed by French companies, to pay a symbolic tax on the spot, before repatriating them to the national territory without having to pay tax.
Ireland, on the other hand, has specialised in "packaging companies" and has thus become one of the world's leading exporters of pharmaceutical and electronic products, even though there are no significant companies in these sectors in the country. The mechanism is simple, it is based on transfer pricing. For example, a Japanese pharmaceutical laboratory or an American producer of tablets send components or parts to Ireland at an artificially low price. Production is completed on site and re-exported to France at a high price that will not allow the final distributor to make a profit, which will avoid paying tax. The profits will be located in Ireland where tax rates are artificially low and all profits will return to the parent companies in their country of origin.
France must therefore exert all its influence in Brussels to put an end to these practices that weigh on its tax revenues. But the major challenge in the coming years, and this will be the mission of the next governments, will be to modernize our tax system to adapt it to new economic realities.