Taxation in France

Taxation in France is determined by the yearly vote of the budget by the French Parliament, which determine what kind of taxes (or quasi-taxes) can be levied and which rates can be applied.

French public and quasi-public budgets can be classified into three categories:

The budget of the national government (288.8 billion euro forecast in 2005 [1]).
The budgets of social security organizations. These are private organizations endowed with a mission of public service (even though they behave to a large extent like public administrations).
The budgets of the various local governments.

It is important to note that the social security budgets are larger than the budget of the national government. Both the national government's budget and the social security budgets run deficits.

1 National government

[edit] National government

As of 2005, the project tax revenue was 340 billion euro, before various refunds. (All percentages below relative to project tax revenues for 2005. See the finance law project).

The most important taxes are:

The European Union Value Added Tax (TVA), a variant of the sales-tax: 48% of tax revenue.
The income tax (impôt sur le revenu): 16% of tax revenue.
The tax on corporations: 12% of tax revenue.
The tax on petrol and fuels (TIPP, taxe intérieure sur les produits pétroliers): 6%

The national government also perceives a tax of solidarity on fortune, levied on the fortunes of the most wealthy of the population. While this tax actually collects very little revenue (2%), it is very controversial, since most of the Left considers it a symbol of solidarity, while many on the Right argue that it incites entrepreneurs to leave France.

[edit] Income tax

French income tax is a progressive tax, i.e. tax is an increasing piecewise affine continuous function of income (excluding various rebates etc.). This means that the amount of income earned up to a certain amount t₁ is taxed at a rate r₁, then the remaining money, up to a certain amount t₂ is taxed at a rate r₂, etc.