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Taxes and Social Contributions
in France and in Germany
March 2011
of the Public Thematic Report
his Summary is designed to make the Report of the
Cour des Comptes more accessible for reading and
The Cour des Comptes is responsible only for the
content of the Report.
Replies from the administrations and entities directly
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of the Public Thematic Report of the
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
The characteristics of taxes and social
contributions in France and Germany
. . . . . . . . .
Review by Blocks of levies . . . . . . . . . . . . . . . .
Main Findings from the Comparison . . . . . . . . . .
General Conclusion
. . . . . . . . . . . . . . . . . . . . .
Main Observations
. . . . . . . . . . . . . . . . . . . . . .
Recapitulation of Main Recommendations
. . . .
n September 2010, the Cour des Comptes undertook a project aimed at com-
paring the French and German taxes and social contributions, thus acceding
to a request made by the President of the French Republic.
The Cour des Comptes felt that such an examination must necessarily make allo-
wance for the context in each country, and in particular their respective situation with
regard to the economy and public finances. It carried out a comprehensive analysis of
both countries’ taxation and social security systems, whilst never losing sight of the fact
that the competitiveness and attractiveness of a country are influenced by factors other
than taxation alone.
In order to perform this analysis, the Cour des Comptes organised the broadest
consultation feasible: a group of experts was set up to inform the work of the Cour
des Comptes and hearings were held with officials from trade unions and professional
organisations and with taxation experts. Moreover, productive technical exchanges were
held with the German Federal Ministry of Finance, which had been designated as the
Cour des Compte’s interlocutor.
The report is issued under the sole responsibility of the Cour des Comptes
of the Public Thematic Report of the
Cour des comptes
of the Public Thematic Report of the
Cour des comptes
Cour des comptes
The Characteristics of
Taxes and Social
Contributions in France
and Germany
Two Diverging Economic
France and Germany’s combined
GDP is more than half that of the euro
area and the two countries are relatively
homogeneous from an economic and
social point of view : per capita GDP is
close; the pace of growth is similar ; and
the scope of social protection is exten-
These similarities should neither
mask the deep structural economic dif-
ferences nor the existence in recent
times of contrasting developments.
Germany, in contrast to France, is
driven by medium-sized enterprises
(Mittelstand). The country’s growth is
based on industry (25.6 % of GDP,
compared to 13.6 % in France) and,
even more than in the past, on exports,
to the relative detriment of consump-
Average annual growth between
2000 and 2010 was slightly higher than
in France (1.5 %, compared to 1.1 %),
and since 2006, the pace has been more
brisk in Germany. Recovery from the
economic crisis has been quicker.
Germany looks set to have an apprecia-
bly higher pace of growth during the
years 2010-2012.
The higher growth rate in Germany
since 2005, the reforms undertaken on
the labour market and the extensive use
of partial unemployment during the
2008-2009 crisis enabled Germany to
reduce its unemployment rate to 6.6 %
at the end of 2010, as compared to
9.7 % in France.
The share of value added has deve-
loped differently over the 2000s. The
share of wages and salaries remained
stable in France. It decreased by five
points in Germany, having started from
a higher level. This phenomenon
reflects, over and above the initial shock
of German reunification, the effects of
the country’s wage moderation policy.
Structural Gaps in
Competitiveness, Recent
Trends Favourable to
Competitiveness in France and
Germany has followed diverging path-
Germany has for quite some time
benefited from a non-price competitive
edge : German products are seen as bet-
ter quality ; the strategy of establishing
subsidiaries in export markets; the larger
The Characteristics of Taxes and
Social Contributions
in France and Germany
of the Public Thematic Report of the
Cour des comptes
size of its export sector ; and better geo-
graphical diversification of its export
Cost-based competitiveness has
significantly improved over the decade
since 2000. The rise in unit wage costs
(including both hourly wage costs and
progress in productivity) has been 10
points higher in France than in German
industry over the 2000-2008 period. The
advantage that France enjoyed in this
area in the early 2000s has now been
The German trade surplus has
continued to grow (€134 billion in
2009) ; the French deficit has continued
to worsen (€53 billion in 2009). France’s
market share, both within and outside
the European Union, dropped by about
three points between 2000 and 2009.
Redistribution: A More
Extensive Mechanism in
The scope of social protection is
more extensive in France than in
Germany : greater consideration given
to the burdens weighing on families ;
more protective unemployment insu-
rance ; the entire population covered by
a compulsory health care system ; com-
schemes. These characteristics are of
major significance for redistribution :
they account, in France, for some 63 %
of the reduction of inequalities, while
the remaining 37 % can be attributed to
progressive taxes.
In the year 2000 income gaps were
smaller in Germany than in France. The
situation reversed as of 2006, before the
two countries converged an arrived at
very close levels in 2009. The Gini coef-
ficient – an indicator of inequality – has
remained stable in France throughout
the period. It increased by 20 % in
Germany. The relative rate of poverty
increased by half in Germany between
2000 and 2009, whereas it decreased by
20 % in France.
Fiscal Policy: More of a
Priority in Germany
Germany gives greater priority to a
balanced Government budget. France
has not seen a budget surplus since
1974. Since the year 2000 German
Government budget were in a surplus
during three financial years.
Germany used the period of relati-
vely high growth that it experienced
before the recession to reduce its
Government deficit. In 2008, at the
onset of the crisis, France’s deficit was
3.3 % of GDP, whereas Germany had a
surplus of 0.1 % of GDP. Today, the
French structural deficit is more than
three points higher than that estimated
for Germany.
The gap between the German and
French budget situations can for the
most part be explained by the dynamics
of public spending. Between 2000 and
2008, Germany slowed down the
increase of public spending (drop from
45.1 % of GDP to 43.8 %), which was
The Characteristics of Taxes and
Social Contributions
in France and Germany
of the Public Thematic Report of the
Cour des comptes
not the case in France. In 2000, French
Government debt was lower than
European Union average. In 2010,
Government debt equalled 80 % of
GDP in Germany, compared to 83 % of
GDP in France.
The Level and
Structure of Taxes
and Social
High Taxes and Social
Contributions in both
Countries; Sharper
Reduction in Germany
Many of France’s taxes and levies
have no equivalent in Germany; the
converse is far less often the case. This
is particularly true for taxes paid by busi-
nesses and which burden production
costs; these account for an estimated
total amount at €58 billion in 2008, in
other words, 3 GDP points. These taxes
are levied on the payroll (€26.5 billion),
fixed capital and turnover. Regarding
taxes on households, the CSG and the
CRDS partially compensate for the nar-
row scope of personal income tax; the
(€13.3 billion) and the ISF wealth tax
(€4 billion) have no equivalents in
The tax-to-GDP ratio in both coun-
tries is considerably higher than the ave-
rage across the European Union (at 27),
but the gap between the two countries
in terms of overall taxes is significant
(approximately 3.5 % of GDP). More
than two-thirds of this gap can be
explained by the different scope of the
social protection.
Taxes and Social
Contributions by Level of
In Germany, 40 % of taxes and
social contributions go to social security
funds ; 30 % to the central State ; and
30 % to local authorities and Länder.
The breakdown has not changed in
recent times. In France however, the
proportion of taxes and social contribu-
tions which goes to the central State has
decreased by 3.2 % of GDP between
2000 and 2008, to the benefit of social
security funds and local authorities. In
2008, 36 % of overall taxes and social
contributions were apportioned to the
central State ; 52 % to social security
funds ; and 12 % to local and regional
Germany is a federal State but there
is little autonomy regarding local taxa-
tion. In France the revenues of a num-
ber of levies are 100 % earmarked for
funding local and regional authorities. In
Germany 75 % of the Länder’s tax reve-
nues are derived from taxes which are
shared with the federal State, and then
The Characteristics of Taxes and
Social Contributions
in France and Germany
of the Public Thematic Report of the
Cour des comptes
re-distributed in accordance with a for-
The Economic Analysis of
Eurostat data slightly overestimates
the difference in taxation on capital
(about 3 GDP points), but it is nonethe-
less significant. In France, between 2000
and 2008, it is taxation on consumption
that decreased the most (-0.9 GDP
point); in Germany it was taxation on
labour (-2.7 GDP points).
Source : données Eurostat
Breakdown of Taxes and Social contributions by Economic Function
(as % of GDP)
The Characteristics of Taxes and
Social Contributions
in France and Germany
of the Public Thematic Report of the
Cour des comptes
Taxation on Consumption
consumption, whereas Germany – as is
the case on average among the countries
of the European Union – has tended to
do the opposite. In 2008 France taxed
household consumption at the rate of
19.1 %, as opposed to 19.8 % in
Germany, and 21.5 % on average in the
European Union.
This tendency can be explained in
France by the drop in the normal VAT
rate, the extension in scope of applica-
tion for the reduced rate, the elimination
of the “vignette” vehicle tax and modi-
fications made on the TIPP (a tax on oil
products). In Germany, the upsurge is
due to the three-point increase of the
normal VAT rate (from 16 % to 19 % as
of 1 January 2007), designed to finance
Government deficit reduction and half
of the 1.6 % net drop in social contribu-
Taxation on Labour
The rates of taxation on salaried
labour are similar in France and
Germany (41.4 % and 39.2 % respecti-
vely) and are above than the European
Union average.
This rate has been stable in France
since 1995. The impact of the decrease
in social contributions levied on low
salaries was neutralised over the period
in question by the increase in other
wage-based taxes. Germany has, on the
contrary, been decreasing wage-based
taxes since 2004 in order to improve the
competitiveness of its enterprises (drop
in social contributions on low wages
under the so-called “Hartz” Laws, drop
of 1.6 points in social contributions in
2007, reduced personal income tax rate
since 2000).
Taxation on Capital
The German rate of taxation on
capital has decreased considerably since
2000 and is now well below the
European Union average. France has a
significantly higher rate: in all, capital
was taxed at 38.8 % in 2008, compared
to 23.1 % in Germany, and the
European Union average of 26.5 %.
Revenues from taxation of capital
income are comparable in the two coun-
tries. France levies more taxes on capital
stock (4.5 % of GDP, as opposed to
1 % for Germany). Most of the gap bet-
ween the two countries in relation to tax
on capital stock comes down to, on the
one hand, levies that exist in France
alone (the taxe professionnelle; the ISF
wealth tax; transfer taxes; C3S, a solida-
rity tax weighing on businesses; the taxe
d’habitation, or residence tax), and, on
the other hand, the fact that taxation is
considerably heavier in France (the taxe
foncière, or property tax; mutations à
titre gratuit, tax on inheritance and
The gap between the two countries
as regards taxation on capital income is
slight and has not changed since 2000.
In 2008, this taxation amounted to
5.8 % of GDP in Germany and 5.3 % in
France. In terms of rates for taxation on
The Characteristics of Taxes and
Social Contributions
in France and Germany
of the Public Thematic Report of the
Cour des comptes
Germany remain above the European
Union average (21 % and 19.7 % res-
pectively, compared to 19.3 %).
Environmental Taxation
Revenues from environmental taxes,
as defined by Eurostat, are lower in
France (2.1 % of GDP in 2008) than in
Germany (2.2 %) and lower than in the
remainder of the European Union
(2.6 %).
The progression of environmental
tax revenue was nonetheless similar in
the two countries between 2000 and
2008. The tax burden on energy pro-
ducts is markedly higher in Germany
than in France. Taxes levied on the
transport sector are more prevalent in
France, due primarily to the versement
transport (transport tax) (€6 billion)
which does not exist in Germany, but its
classification within the category of
environmental taxes is subject to debate.
of the Public Thematic Report of the
Cour des comptes
Cour des comptes
Review by Blocks
of Levies
Taxes and Social
Contributions levied
on Household
Different tax and social
contribution structures
The architecture of taxes and social contri-
The share of income tax in GDP is
more than three times higher in
Germany than in France (9.6 % of
GDP, as against 2.6 % respectively).
Taxation of household income in
France has been impacted since the
beginning of the 1990s by the introduc-
tion and subsequent upscaling of pro-
portional taxes (the CSG and CRDS)
earmarked for funding the social protec-
tion system; these levies essentially
replaced social contributions. In 2008,
these proportional taxes accounted for
4.6 % of GDP.
Social contributions are significantly
higher in France than in Germany (res-
pectively 15 % and 12.6 % of GDP).
They are not shared out between
employers and employees in the same
manner : whereas in Germany the
employer and employee share is practi-
cally identical, in France the employer
share is more than double that of the
employee (respectively 11 % and 4 % of
Personal income tax
The top marginal personal income
tax rate is higher in Germany than in
France: 45 %
in Germany, as compa-
red to 41 % in France. This situation
arises from the fact that the rate for the
highest marginal bracket has dropped
more significantly in France over the last
20 years.
Personal income tax in both France
and Germany are subject to an income
splitting system that applies to married
couples, whereby the overall income of
the household is considered for the pur-
poses of assessing payable tax. German
households nonetheless have the option
of being taxed separately.
The way that children are accounted
for is noticeably different in the two
countries; Germany does not have any
familial income splitting system analo-
gous to the French one. German house-
holds have a choice between receiving
family benefits or being granted a tax
A “solidarity surcharge” of 5.5% of the amount of tax owed is added to this 45% rate.
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
In both countries, a cut for work-
related expenses may be calculated
either on a fixed-rate basis or with
regard to actual expenses incurred. The
fixed-rate method in France is markedly
more advantageous than in Germany
(10 % of wages and salaries subject to a
€13,948 cap in 2010, compared to €920
in Germany).
Income tax in Germany is withheld
at source, but this does not exempt most
taxpayers from having to file a supple-
mentary tax return.
Tax expenditures relating to income
tax are significant in both countries, but
are more numerous and more costly in
Social taxes and contributions
Germany has not diversified the
methods for funding social security in
the same way that France has with the
CSG, which weighs largely on house-
hold income and, in particular, on capi-
tal income. The overall contribution
from income to social security is signifi-
cantly more regressive in Germany than
in France.
Opportunities for exemption from
social contributions are much more
extensive in France (for a cost of more
than €30 billion) and mainly concern
employer contributions on low earnings
(up to 1.6 minimum wage). In Germany,
relief is granted only on social contribu-
tions and it is more restrictively targeted
than in France.
Generally similar effects in
terms of labour costs and
In 2008, social contributions levied
on household income came to 23.3 % of
24.9 %
Germany. The impact of social contri-
butions (payroll contributions, adjusted
for concessions and exemptions) and
tax (on income and, in France, the CSG
and CRDS) on labour costs is compara-
ble in the two countries. The ratio of
aggregate income tax and social contri-
butions to overall labour costs incurred
by employers – also referred to as the
“social contribution and tax wedge” – is
49.2 % in France and 50.9 % in
Germany for the average wage. This
ratio is far higher in both countries than
the average for the OECD countries,
which is 36.4 %.
As for comparative taxation of
higher earnings, in addition to the
higher top marginal rate in Germany,
the tax shelters likely to be used by
higher earners to ease their tax burden
are less common and capped at lower
levels than in France.
Finally, alongside the taxes and
social contributions on household
income, both countries grant significant
relief to families. The German system
appears to be a fraction more generous
for families that have one or two chil-
dren as regards benefits in cash. The
French system is more advantageous in
the area of benefits in kind (child-min-
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
ding schemes). It is more beneficial to
families with three or more children and
to families earning higher income.
Taxes and Social
Contributions levied
on Wealth and
Taxation of assets: a
much higher tax burden in
France than in Germany
Germany, with its moderate pro-
perty taxes (approximately €11 billion),
the suspension of its wealth tax since
1997, and the tax on trading capital that
was abolished in 1998, has chosen to
apply a very low level of taxes on capi-
tal. The overall level of these taxes and
social contributions account for 0.46%
of GDP, well below the OECD average
of 1.13 % of GDP.
In contrast, the level of taxes and
social contributions levied on assets in
France is higher than the OECD ave-
rage. It accounts for 2.6 % of GDP.
This is essentially a result of the rapid
growth of real estate taxes over the last
decade, yielding aggregate revenue of
nearly €33 billion in 2010. Furthermore,
the ISF wealth tax (€3.6 billion in 2010)
has become a French peculiarity in the
European Union (although Norway and
Switzerland have maintained a tax of
this type). Germany decided to “sus-
pend” this type of tax, which earned
some €4 billion, in 1997. In Germany,
there is no legal ceiling on overall taxa-
tion like France’s “tax shield”, but com-
pliance with the principle of outlawing
any over-taxation or confiscatory taxa-
tion is carefully supervised by the
Constitutional Court.
Asset transfers and dispo-
sals – a heavier burden in
France despite similar
policy choices in recent
Only real estate transactions are
taxed in Germany at a lower proportio-
nal rate than in France. In France, pro-
perty transfer duties are levied not only
on real estate assignments, but also on
transfers of shares and business intangi-
bles. In aggregate, the revenues collec-
ted in France (approximately €9 billion
in 2010) are double the German amount
(€4.8 billion).
In recent times, Germany and
France have made generally similar
choices in the area of taxation of capital
gains and gift tax. Taxation of gains on
divestitures of securities was increased
in Germany when the flat and final
withholding tax was implemented, as of
January 2009, and in France as one of
the measures designed to fund pension
scheme reform. The recent reforms of
taxation of donations and gifts – passed
in 2007 in France and 2009 in Germany
– both substantially lowered duties on
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
direct line inheritances, and indeed
exempted inheritances involving small
or medium estates.
Income from assets – an
overall equivalent tax bur-
den, but differences in
Taxation of income from assets
produces relatively comparable revenue
in the two countries : some €25 billion
not including taxes on real estate
Since 2009, Germany has introdu-
ced a flat and full withholding tax
almost across the board that is simple to
apply to all income from assets. France,
for its part, collects both income tax and
social contributions – the overall weight
of which has quadrupled in the last ten
years – but also offers myriad tax
exemptions and incentives.
On balance, the taxation of wealth
and assets in Germany, which in nearly
all respects is below the OECD average,
relies mainly on the taxation of income
and of capital gains earned from assets.
France instead has opted for tax policies
that result in assets being taxed across
the whole chain, from holdings to dis-
posal/transfer, as well as asset-genera-
ted income, at levels that have increased
over time to the point that their econo-
mic incidence (3.4 % of GDP) is far
higher than the average for the OECD
countries (1.8 % of GDP).
Corporate Taxation
Different priorities and tax
structures in the area of
corporate taxation
Local taxation of businesses based on diffe-
rent taxes
In both Germany and France, com-
panies are subject to taxation at two
levels. In addition to corporate tax, busi-
nesses must also pay local taxes: the for-
mer French trade tax that morphed into
Contribution” in 2010; and the trade tax
(Gewerbesteuer) in Germany. While
corporate taxation is based on similar
principles in both countries, the trade
taxes (France’s Territorial Economic
Contribution and the German trade tax)
are different in design. The former com-
prises a contribution based on the value
of the company’s real property, plus a
contribution based on its added value.
The latter is assessed in a manner very
similar to corporate tax. These diffe-
rences are reflected in the respective
burdens that these two taxes represent.
The French trade tax has accounted for
a declining share of contributions levied
on companies over the last ten years; the
proceeds from the German trade tax
have increased considerably. In 2008,
revenues from the French trade tax
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
came to 1.01% of GDP, whereas this
figure was 1.65% in Germany.
A clear-cut divergence in the area of corpo-
rate tax
Starting in the late 1990s, successive
German Governments reformed corpo-
rate taxation with the stated aim of
enhancing the competitiveness of firms.
The reform was implemented in two
stages : first in 2000 and then in 2008. It
led to a sharp drop in the corporate tax
rate, which went from 30 or 40 % in
1999 (depending on whether or not pro-
fits were distributed) to 15 % in 2008.
The reform also entailed a broadening
and simplification of the tax base.
During the same period, there was
little change in France’s corporate tax.
As a result, the proceeds of corporate
tax place a very different burden on
businesses in the two countries : 0.64 %
of GDP in Germany and 2.53 % of
GDP in France. The very small share
arising from corporate tax revenues in
Germany is due not only to the reduc-
tion in the rate of this tax, but also the
fact that 83 % of German businesses
are actually partnerships that are subject
to income tax (as opposed to only 57 %
of French enterprises).
Far more taxes charged to businesses in
France than in Germany
In addition to corporate tax and the
Territorial Economic Contribution, the
French tax system includes a large num-
ber of levies on businesses, principally
the tax on wages and salaries, paid
mainly by banks and insurance compa-
nies in return for exemption from VAT
or the transport charges. Out of these
taxes, the ones that are assessed on
wages and salaries accounted for tax ear-
nings of €26.5 billion in 2008 (1.2 GDP
points) ; they have no equivalents in
True Differences but Not
to be Over-estimated
The German corporate taxation approach
places greater emphasis on the objective of
neutrality than in France
In Germany, one of the goals pur-
sued by public policies, more actively so
than in France, is neutrality. In France,
public authorities have turned taxation
into a lever for economic policy and use
it to guide stakeholders’ investment
choices and behaviour. In Germany, the
emphasis has been placed on allowing
market processes to determine the pro-
duction factors.
This objective of neutrality was pur-
sued in relation to the legal form of
businesses, by seeking to harmonise the
tax burden on partnerships and stock
companies. It was also pursued with res-
pect to types of investment, with depre-
ciation regulations being considerably
simplified. During the same period, the
French tax system continued to develop
incentives that have no equivalents in
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
Germany, the main one being the
research tax credit (€5.8 billion in 2009).
In Germany, alongside the decrease
in rates, the tax base was broadened as
part of the drive to achieve neutrality.
Measures were thus implemented in
2008 to even further widen the corpo-
rate tax base, by setting a cap on the
amount of interest on loans that could
be deducted and by restricting the car-
ryovers of losses.
Both systems achieve an overall equivalent
rate of taxation on businesses
The effects of the two tax systems
are very alike in the area of taxes char-
ged to corporate groups and to divi-
dends between linked companies.
While some of the tax cuts in force
in France have no equivalents in
Germany, the reverse is also true : in
contrast to French legislation, for ins-
tance, the German scheme allows for
depreciation of “goodwill”, thereby
German companies.
Rates of taxation on profits are of
the same order of magnitude in the two
countries. The overall rate of taxation
on profits, obtained by considering cor-
porate tax, the trade tax and the tax on
profits, stood at 31 % in Germany in
2009 ; in France, it was 34.6 %.
Apparent convergence
between the French and
German VAT regimes
The tax base for VAT has been sub-
ject to European Community rules since
1967; it is therefore mainly in the area of
rates that Germany and France have
moved closer to one another. Today, the
normal VAT rates are practically identi-
cal in Germany and France, at 19 % and
19.6 % respectively. The reduced rate is
also similar : 5.5 % in France and 7 % in
Germany. These rates place the two
countries at a level that is significantly
below the European average, which, in
2010, stood at 20.52% for the normal
rate and 8.46 % for the reduced rate. As
a result, the share of VAT revenues in
the GDP of the two countries (7 %) is
also lower than the European average
(7.6 %).
Lingering differences
VAT revenues have more sharply increased
in Germany than in France over the last 20
The similarity in the French and
German VAT schemes is the outcome
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
of two different trajectories. Since 1990,
Germany has increased its normal VAT
rate by five points, while France raised
its normal rate by one point. The share
of VAT in overall tax revenue is cur-
rently higher in Germany (18 % of tax
revenue) than in France (16.4 % of tax
Reduced rates and special exemptions widely
applied in France
France makes more widespread use
of reduced VAT rates than Germany.
The main differences relate to cafés and
restaurants and to “labour-intensive ser-
vices” within the meaning of the VAT
Directive, such as renovation and
repairs of dwellings, which is subject to
the reduced rate in France, but to the
normal rate in Germany.
In addition, France implements
exceptional rates that have no equivalent
in Germany: in particular, the “super-
reduced” rate on medicines covered by
the French national health system and
on newspapers.
As a result of Germany’s more sel-
domness use of the reduced rate and
the inexistence of special rates, VAT
there is more efficient in terms of yield.
The VAT increase as part of Germany’s
Government deficit reduction strategy
Two out of the three percentage
points by which the normal VAT rate
was raised in Germany on 1 January
2007 were earmarked for reducing the
budget deficit, while one point was allo-
cated to reducing unemployment insu-
rance contributions. While a further
increase in the normal VAT rate is not
currently envisaged in Germany, some
thought is being given to reducing the
scope of application of the reduced-rate
so as to raise additional budgetary
resources. Whereas in France the public
authorities have assigned to VAT, and
particularly to its reduced rate, a series
of objectives that this instrument some-
times has difficulty achieving (support
to certain economic sectors, employ-
ment, bringing illegal labour under
control), Germany appears to have set
budgetary yield as being VAT’s main
Aligning the French reduced rate
and its scope of application with those
applied in Germany would generate an
additional €15 billion in budgetary reve-
Heavier taxation on
energy in Germany than
in France
The failed attempts to introduce a carbon
tax in France
France has attempted on two occa-
sions to introduce a carbon tax: the
Review by Blocks of Levies
of the Public Thematic Report of the
Cour des comptes
“TGAP” on energy products in 2000,
and the “carbon contribution” in 2010.
Both of these attempts were thwarted
by the Conseil Constitutionnel on the
grounds that they infringed the principle
of taxpayer equality.
Environmentally-focused taxation reform
gradually implemented in Germany since
In contrast, Germany carried out an
environmentally-focussd tax reform
(Ökosteuerreform) in 1999 that led to te
creation of an electricity tax and a gra-
dual rate increase (by 3.07 cents per year
and per litre for five years) for the tax on
mineral products. The proceeds thereof
funded a 1.7 point reduction in contri-
butions to the retirement insurance
scheme. This reform was furthered in
2006 when excise duties on coal were
established. The overall level of taxation
on automotive fuels and electricity is
now higher in Germany than in France.
By comparison with the other members
of the European Union, these two
countries tax automotive fuels heavily,
whereas the opposite is true for other
fuels. This leads to a situation whereby
the taxation of one tonne of CO2 is
below the generally accepted shadow
price of carbon of €32 : €3 for coal and
€23 for household heating oil in
Germany; €21 for household fuel in
Taxation of road trans-
port: more consistent
changes in Germany than
in France
Under the reforms that have been
carried out since 1999, Germany has, on
the one hand, readjusted tax rates for
motor vehicles on the basis of their
CO2 emissions and, on the other hand,
introduced a toll for heavy goods vehi-
cles (LKW-Maut).
The policy implemented in France is
less consistent. Concomitantly with the
Germans introducing an environmen-
France abolished the “vignette” road tax
for privately-owned vehicles, but subse-
quently established new taxes, such as
the automobile bonus-penalty system
and the tax for heavy goods vehicles
(concurrent with the German toll
Following these changes, the situa-
tions are at variance. Taxes on privately-
owned vehicles are now significantly
lower in France as compared with the
other side of the Rhine (the correspon-
ding revenues come to €2.5 billion and
€8 billion respectively).
of the Public Thematic Report of the
Cour des comptes
Cour des comptes
Main Findings from the
Tax Equations that
are Similar and yet
Similar taxes and social
contributions overall, with
significant discrepancies
France and Germany both enjoy
high levels of social protection, finan-
ced mainly through social contributions.
Because of this, both countries have
devoted particular attention to contai-
ning the cost of unskilled labour, with
Germany increasingly turning to the
general budget to subsidise social secu-
rity funds, and France tending to rely
upon specially earmarked tax revenues.
The French and German tax sys-
tems are characterised by taxes that are
often very similar, be it VAT (the normal
rate of which is 19.6 % in France and
19 % in Germany), personal income tax
(the top bracket is taxed at 41 % in
France and 45 % in Germany) or even
corporate income tax (33.3 % in France,
30-35 % in Germany, once local corpo-
rate taxes have been factored in).
Tax-to-GDP ratios in both coun-
tries are appreciably higher than the
euro area or the OECD average. There
is virtually no tax competition between
the two countries. The economic attrac-
tiveness of both countries stems essen-
tially from non-tax factors (infrastruc-
tures, public services, skilled work-
A comparative analysis did, howe-
ver, reveal often longstanding discrepan-
cies, as well as more recent divergences,
when it comes to tax policy :
- the main differences are: a more
integrated approach in Germany to
taxes and social contributions, since the
Länder, while financially autonomous,
do not have their own tax resources and
Germany has no specific taxation ear-
marked to fund social security ; the gro-
wing burden of social contributions in
France, where family policies are to a
great extent funded by levies on wages ;
a substantial difference in taxation on
wealthand assets, with higher property
taxes in France ; the existence in France
of several taxes that cause higher pro-
duction costs, and that have no equiva-
lent in Germany (of which €26.5 billion
are based on wages).
- with regard to policy divergences
over the last decade, three are particu-
larly significant: a lower priority in
Government deficits, in particular those
of its social security system; a faster
growth in tax and social contribution
cuts in France in the 2000s ; continued
Main Findings from the Comparison
of the Public Thematic Report of the
Cour des comptes
policy emphasis in Germany on redu-
cing Government deficits and restoring
German Tax Policy
More Explicit and
Focused on
German taxation policy more clearly
identifies a priority objective for each
taxation category. Accordingly, the
1 January 2007 was basically motivated
by the need to rebalance Government
accounts. The overarching objective of
corporate tax reforms in 2000 and in
2008 was to improve the competitive-
ness and attractiveness of companies
operating in Germany, and the redistri-
butive role of personal income tax was
unequivocally reaffirmed by the creation
of a bracket, taxed at 45 %, for income
higher than €250,000 per annum. In
contrast, the French debate on taxation
seems less clear-cut, with multiple
objectives assigned, implicitly or expli-
citly, to many taxes or tax adjustments ;
a recent example of this is the switch to
the reduced VAT rate for the restaurant
and catering industry.
The economic neutrality of each
individual tax is more clearly a priority
for German tax policy. With regard to
corporate taxes, income tax or VAT,
there is less room in Germany than in
France for tax incentives. The “tax inter-
ventionism” that is so characteristic of
France is due, in part, to a different
underlying economic conceptualisation
of the respective roles of the State and
the market.
Developments in tax legislation
appear less profuse, and more predicta-
ble, in Germany than in France. This is
undoubtedly due to the fact that tax
revenues are to a very large extent sha-
red between central Government and
the Länder, as well as to a political tradi-
tion marked by coalition governments,
with painstakingly negotiated pro-
grammes that are implemented throu-
ghout the duration of a legislature.
Lastly, the public debate over taxa-
tion in Germany tends, more so than in
France, to be organised around quanti-
fied targets, in particular ceilings on
taxes and social contributions. With res-
pect to social contributions, successive
governments have stuck to an overall
rate of 40 %. The corporate tax reform
of 2008 pursued a similar objective.
Factors Specific to
France’s Situation
There are three characteristics of
our country’s situation that limit the
scope for potential rapprochement or
The overriding need to redress fiscal
policy requires strict and lasting control
over public expenditure, without ruling
out the tax revenue lever. Any conside-
ration of tax reform must assume
constant yields in the immediate, and be
based on prudent hypotheses.
Main Findings from the Comparison
of the Public Thematic Report of the
Cour des comptes
Competitiveness plays a central role,
given the risk of a growing gap between
the two economies, and the loss of the
relative cost advantage that France
enjoyed in the early 2000s.
Redistribution plays a more promi-
nent role in our tax system. Income,
however, may be redistributed in two
ways : through taxes and social contribu-
tions ; but also by the benefits and trans-
fers. The latter tool is undoubtedly finer,
and often better suited to the objective
of redistribution.
Based on Clear
Possible Avenues, per
Block of Taxes and Social
In France, the drop in progressive
taxation of income (the relative weight
of income tax has been halved over the
last 20 years, and represented a mere
2.59 % of GDP in 2008), paralleled by a
rise in proportional taxation (CSG,
CRDS), should prompt us to re-exa-
mine all taxes concerned, and the overall
degree of progressiveness desired. In
comparison, income tax in Germany
has continued to be higher and somew-
hat more progressive, but taxation of
wealth has remained limited, and the
funding of social protection is based
less on solidarity.
With regard to unit salary costs, the
trend in the two countries has been
divergent over the last ten years. Priority
must thus be given to ways of decrea-
sing the relative weight of labour-based
taxes, especially those borne by compa-
nies exposed to international competi-
Above and beyond these two issues,
the juxtaposition of high employer
contribution rates and of massive exo-
nerations for low salaries makes the
French system less transparent, and
raises the question of modifying the
contributions scale to more clearly
reflect the actual rates paid.
With respect to VAT, too, the trends
in France and Germany have been
divergent. VAT revenues in France
dropped by 0.4 GDP points between
1995 and 2008, as opposed to the gene-
ral upward trend in Europe. In budge-
tary terms, two-thirds of additional
revenue to be gained from harmonising
the scope and rates of reduced VAT
between the two countries (€ 15 billion)
could come from two entries alone
(repairs, upgrades or maintenance work
undertaken in dwellings and restaurant
and catering services).
although the overall level differs little
between the two countries, Germany
has, over the decade since 2000, develo-
ped its regulations along the lines of a
broader tax base and a reduction in
Main Findings from the Comparison
of the Public Thematic Report of the
Cour des comptes
When compared with other OECD
countries, taxation of wealth and assets
is very low in Germany. Because of this
atypical situation, the latter cannot be
considered an ideal benchmark for
France. Certain aspects of wealth taxa-
tion do nonetheless deserve considera-
- Germany has opted for taxation of
asset-generated earnings, and lowered,
or kept at low rates, taxation on hol-
dings and transmission. At the same
time, it has kept its income tax high,
with its top bracket taxed at a higher rate
than in France;
- the elimination of an overarching
wealth tax, in Germany and elsewhere,
was in part due to the legal and political
difficulty in establishing satisfactory
bases for the valuation of real estate
holdings to be factored into the tax
base. In this respect, the French wealth
tax (ISF), based on market value assess-
ments, seems more robust. It suffers,
however, from two intrinsic shortco-
mings: a narrow tax base; and progres-
sive rates that run higher than current
rates of inflation or of return on finan-
cial investments;
- when it comes to taxation of
income from assets, Germany recently
opted for a flat and final withholding
tax. The French approach, combining
proportional social contributions with a
State taxation that in turn juxtaposes
payment according to scale and an
optional flat-rate levy in discharge, des-
erves a comprehensive re-examination;
- lastly, the German situation regar-
ding taxation of the transmission of
professional assets is characterised by
the absence of any imposition on dives-
titure of company goodwill and shares.
To benefit from these more favourable
conditions, however, German compa-
nies must submit to stricter require-
ments regarding maintenance of jobs
and activity in the event of transfer.
When it comes to environmental
taxation, an examination of German
legislation reveals two areas in which a
rapprochement could bring out some
budgetary elbow room: taxation of
energy consumption and of privately-
owned vehicles.
The Big Choices Ahead
conclude that France must, in the near
future, remedy the divergences with
Germany observed recently in terms of
fiscal policy and competitiveness. This
will not be possible without resorting to,
inter alia, the tool of taxation.
In addition to the tax shelters that
deserve re-examination, two areas offer
some leeway: taxation on consumption,
with the scope and rate of reduced
VAT; and environmental taxation (taxa-
tion of energy products and privately-
owned vehicles). The additional revenue
thus generated could be used to reduce
Government deficits or to improve
competitiveness by easing taxation on
labour and the costs of production
borne by our companies.
Main Findings from the Comparison
of the Public Thematic Report of the
Cour des comptes
In order to reduce costs and bolster
competitiveness, priority could be given
to employer contributions (family bene-
fits branch) or to labour-based taxes that
increase production costs. In time, fun-
ding collected from firms for public
policies bearing no direct link to compa-
nies (family, transport or housing poli-
cies) could be phased out and gradually
replaced by universal funding, provided
that due attention is given to the redis-
tributive impact of such changes.
European Policies
and the Franco-
German Framework
for Impetus and
The Limits of Policies
Introduced at the Level of
the European Union
Within the European Union, the
provisions provided for in the Treaty
regarding taxation are constrained by
the rule of unanimity. They are also gui-
ded by one central objective: the smooth
operation of the internal market. The
fact that common bases and minimum
rates for indirect taxes have been set has
not prevented France and Germany
from pursuing divergent policies in
recent years. Tax competition within the
EU is on the rise, especially given gro-
wing heterogeneity among member
States due to enlargement. The traditio-
nal tools for harmonisation are losing
steam, and many issues are in fact set-
tled by the European Court of Justice.
The lack of any momentum toward
convergence within the EU is echoed in
the euro area, which is precisely where
convergence is most needed. The reason
can be found in the feebleness of the
tools for coordinating economic poli-
cies, which have proved unable to pre-
vent certain States from pursuing
“aggressive” corporate taxation policies.
The Possibilities of the
Assuming that there is a strong poli-
tical will on the part of both States,
several levers for action could be used to
lock the two countries’ tax policies into
a dynamic of increasing convergence:
- the definition of common posi-
tions that could facilitate the emergence
of a convergence process at the level of
the European Union : Franco-German
common positions could constitute a
core around which a broader form of
convergence could emerge, for example
in the framework of closer cooperation
as provided in the Treaty ;
- the identification of good prac-
tices, each country being free to
improve the performance of its own
taxation system ;
- the implementation of a simplifi-
cation programme aiming to offer both
enterprises and households concerned a
Main Findings from the Comparison
of the Public Thematic Report of the
Cour des comptes
guarantee of “convergence on a daily
basis” (cross-border business transfers,
rules on transfer pricing).
This non-exhaustive list highlights
what can be gained from continued joint
effort to analyse and resolve these diver-
gences in taxation practices.
For these levers to be effective,
however, they must be underpinned by a
strong long-term political will. The
impetus may be provided by the Franco-
German Council of Ministers and the
pivotal role played by the Franco-
German Economic Council. There are
several ways in which this could be
achieved :
- regular exchanges (during the first
half of each year, in connection with
the “European semester” initiative on
budget policy run by the Commission)
of a comprehensive nature on short-
and medium-term tax policy orienta-
tions in order to promote convergence ;
- an annual working programme
aimed at resolving technical or practical
problems that cause difficulties for eco-
nomic stakeholders and individuals ;
- comparative studies on topics rela-
ting to taxes and social contributions
and their economic and social impact.
General Conclusions
of the Public Thematic Report of the
Cour des comptes
With regard to levels, structure and effective rates of tax and social contribu-
tions, France and Germany are in many respects very close. The two countries could
join forces in order to further European initiatives in favour of greater tax harmo-
nisation, for example in corporate taxation. Within the euro area, the scope of
Franco-European economic cooperation could be extended to cover taxation matters.
A comparison between the French and German taxes and social contributions
provides many useful lessons, but also much for concern.
The structural Goverment deficit of France, to which the Cour des Comptes has
unceasingly drawn attention, is more than three points higher than in Germany. It
is above all due to the fact that France has proven less able than Germany to contain
the rise in public expenditure. It is also linked to differences in the political princi-
ples underlying tax policy (greater priority given in Germany to maintaining reve-
nues, a philosophy focussed on economic neutrality) or budgetary policy (de facto pro-
hibition of a sustained social security deficit).
Above and beyond these factors, certain elements bespeak a wider economic
divergence and arouse concern over the French situation. Germany, throughout the
decade beginning in 2000, has given priority to improving its competitiveness. It
today is reaping the benefits of this approach, which has had a positive impact on
costs, employment and the trade balance. Taxation policy has played a role in this
France cannot afford to let these factors of divergence go uncorrected. With res-
pect to tax and social contribution policy, it must aim at redressing its fiscal policy
and improving its competitiveness, within a sufficiently stable and predictable fra-
mework. The comparison with Germany highlights potential areas for additional
revenue collection (by rethinking certain tax and social cuts, the scope and rate of
reduced VAT, or the taxation of energy goods and transport) and the uses to which
it may be put (further reduction of deficits, lightening taxes and social contributions
on labour).
For such changes to become truly effective, they must elicit the broadest possible
support on the part of political, economic and social stakeholders, and lead to an
explicit medium-term taxation strategy, enshrined in public finance programming
legislation, whose continuity is ensured over time.
List of Main Observations
of the Public Thematic Report of the
Cour des comptes
General characteristics of
the countries and their tax and
social security systems:
for some years, the economic
trends in France and Germany, with
regard to growth, export competitive-
ness and the unemployment rate, have
been divergent. The only aspect in
which Germany has fared worse than
France has been the rise in inequalities;
the rise in unit salary costs in
French industry was ten points higher
than in German industry over the
period 2000-2008; this trend, which
was not specific to France, bridged the
gap that existed at the beginning of the
decade ;
the situation with regard to fis-
France is higher than in Germany by
over three GDP points ;
compared with other European
countries, the burden represented by
taxes and social contributions is high in
both France and Germany. It has,
however, had a tendency to decrease
more in Germany than in France. The
difference between the tax-to-GDP
ratios amounts to 3.5 % of GDP, and
two-thirds of this difference is due to
differences in the scope of the social
security ;
the consumption tax burden is
comparable in the two countries. Since
2000, however, the trend has been
divergent: downward in France, due in
particular to the introduction of seve-
ral reduced VAT rates, as opposed to
the recent rise in Germany, as well as in
most European countries ;
taxation based on wages is at a
comparable level in the two countries,
although it has been decreasing in
Germany in recent years, which is not
the case in France. Among the diffe-
rent salary-based taxes, French compa-
nies have several that are pegged to the
wage bill (payroll tax, transport tax and
apprenticeship tax in particular), the
amount of which has increased since
2000, but which do not exist in
Germany ;
taxation of capital, which has
changed little since 2000 in either
country, accounts for much of the gap
between levels of tax-to-GDO ratios.
Some taxes represent a higher burden
in France (property and transfer taxes),
whereas others have no equivalent in
Contribution and C3S for companies,
residence tax and, to a lesser extent,
ISF wealth tax to which households are
subject) ;
Germany, and is at any rate low when
compared with the rest of the
List of Main Observations
of the Public Thematic Report of the
Cour des comptes
European Union. The difference
would be even more marked if the sta-
tistics did not take account of the
transport tax ;
tax policies applied since 2000
have differed in France and Germany.
Any consideration of convergence on
taxation should take into account that
the room to manoeuvre, in terms of
fiscal policy, is not the same in both
Tax and social contributions
based on household income :
personal income tax, as a per-
centage of GDP, is three times higher
in Germany than in France (9.6 % and
2.6% respectively in 2008), due to a
lower tax base in France, itself the
result of high fixed-rate cuts and
costly tax expenditures, and of a stee-
per drop in the top marginal income
tax rate in recent years. In France, the
drop in personal income tax has been
paralleled, for the last twenty years or
so, by an increase in the CSG and the
CRDS, which are strictly proportional
to income and which amount to
around 4.6 % of GDP (2008) ;
social contributions, which in
Germany are funded on an almost
employees, are marked in France by a
much higher employers’ share (11 %
of GDP as opposed to 4 % for
employees), despite substantial exemp-
tions for low salaries. In contrast to
France, social contributions are effec-
tively regressive in Germany, due to
ceilings on the base and on the
amounts ;
the overall impact of these
taxes and social contributions, despite
major structural differences, on the
cost of labour is quite similar in
France and Germany, with a slightly
progressive tax/social contributions
“wedge”, close to 50 % in both coun-
tries. Regarding allowances for chil-
dren, the two systems achieve compa-
rable results, although in France the
situation is somewhat more favourable
for families with three or more chil-
dren, or for high-income families.
Taxation of wealth and assets :
Germany’s policy choices have
resulted in a very low wealth tax bur-
den, which only represents 0.85 % of
its GDP (2009), in other words, less
than half the OECD average. France’s
position in this respect is diametrically
opposed, with wealth taxes represen-
ting 3.41 % of its GDP, or more than
twice the OECD average ;
the taxation of wealth and asset
ownership shows a clear divergence
between the two countries. Germany
suspended (wealth tax) or did away
with (professional tax on capital) taxes
on capital stock in the late 1990s, and
its property taxes have remained low
and stable over time. France, for its
part, has seen a steep rise in revenues
from property taxes, and is the only
European Union country that conti-
List of Main Observations
of the Public Thematic Report of the
Cour des comptes
nues to have a national wealth tax
(ISF) ;
the two countries have recently
enacted very similar reforms in the
field of gift taxes, with the two-fold
goal of exempting, to a rather large
extent, small and medium property-
holders, and facilitating the transfer of
companies. The two countries’ prac-
tices nonetheless remain very diffe-
rent, as both the base and the rates are
lower in Germany than in France ;
lastly, the taxation of income
from assets, although the overall yield
is comparable between the two coun-
tries, is based on very divergent
mechanisms, with a flat-rate levy in
Germany, and in France scaled income
tax and proportional social contribu-
tions, with the latter increasing in
importance. Recent tax policy choices
have led, in both countries, to higher
taxation of capital gains.
Corporate taxation :
corporate taxation has develo-
ped in different directions in the two
Germany has greatly reduced the
weight of its corporate tax, the rate of
which fell from 30/40 % in 1999 to
15 % in 2008, whereas the level of cor-
porate tax rate remained stable overall
in France. Revenues from corporate
tax amounted to 0.64 % of GDP in
Germany (the lowest figure in the EU)
as opposed to 2.53 % in France. This
observation, however, should be tem-
pered by the fact that a large share of
German companies are classed as
partnerships ;
Germany has a local corporate
tax known as the Gewerbesteuer, or
commercial tax, the base of which is
similar to that of the corporate tax per
se; the rate at which profit is taxed in
Germany is, in our study, the sum of
the two taxes. The resultant rate is
slightly lower in Germany (31 %) than
in France (34.5 %) ;
corporate tax in Germany is
characterised by the search for neutra-
lity, favouring a low rate and a broad
base. The French system, on the
contrary, is incentive-driven, with a
higher rate but a narrower base. The
most important corporate tax break in
France is the research tax credit, which
has no equivalent in Germany ;
the two corporate taxation sys-
tems are, on the whole, rather similar,
and could eventually come to have the
same base ;
France, however, has many
taxes on production, the most impor-
tant of which are the payroll tax and
the transport tax, which together
represent around 1.2 % of GDP.
There is no equivalent to these in
VAT rates, and the share of
GDP they represent, are similar today
in both countries. This is, however, the
List of Main Observations
of the Public Thematic Report of the
Cour des comptes
result of a divergent trend over the last
20 years: downward in France; upward
in Germany ;
the sectors where reduced VAT
rate is applied are much broader in
France than in Germany; in particular,
the restaurant and catering trade and
labour-intensive services (building
repair work) benefit from a reduced
rate, whereas in Germany this measure
only applies to the hotel sector ;
alongside the reduced VAT rate,
France has several exceptional rates
(five exceptions to the normal rate and
the reduced rate) applicable to certain
activities (press and medication cove-
red by the social security system are
subject to a super-reduced rate of
2.1 %) and certain regions (Corsica,
overseas départements) ;
all in all, the efficiency of
French VAT in terms of yield appears
lower than in Germany. Were France
to adopt the rate and scope of reduced
VAT practised in Germany, the addi-
tional budgetary revenues would
amount to €15 billion.
Environmental taxation :
although France has twice failed
in its efforts to introduce a carbon tax,
Germany has been implementing a
gradual reform of its environmental
taxation since 1999. In that year, a
reform (Ökosteuerreform) was pas-
sed, which basically consisted of an
increase in taxes on energy products
(automotive fuels in particular) and
electricity, in order to lighten the tax
burden on labour. The scope of this
reform has gradually expanded since
2005, with, inter alia, the establish-
ment of new environmental taxes:
tolls on heavy goods vehicles, air
transport tax. Environmental taxation
is thus more highly developed in
Germany than in France ;
when it comes to energy pro-
ducts, both countries have heavy taxes
on automotive fuels, while other fuels
are more lightly taxed than in the rest
of the European Union. Automotive
fuel tax rates, however, are higher in
Germany than in France. Likewise,
electricity consumption is taxed more
heavily in Germany than in France ;
Germany, like most European
countries, has a tax on motor vehicle
ownership. In France, since the aboli-
tion of the annual tax on privately-
owned vehicles in 2001, only corpo-
rate passenger vehicles and the most-
polluting vehicles (since 2008) are
taxed on an annual basis. However,
there are three different taxes paid
upon vehicle registration. In all, the
French system seems more complex,
and the resulting revenues are lower,
than in Germany.
Summary of Main Recommandations
of the Public Thematic Report of the
Cour des comptes
The comparison of French and
German taxes and social contributions
has served to shed light, throughout
this report, on ways in which some
types of deductions may be reformed.
In addition, the Cour des
Compte’s findings include four
general recommendations regar-
ding tax policy as a whole :
conduct a systematic re-exami-
nation of the merits of each tax and
social contribution that, beyond man-
datory social security contributions,
brings about a rise in production costs
for companies, with special attention
to taxes based on labour ;
step up the reduction of tax
and social system breaks, pursuant to
recommendations by the Cour des
Prélèvements Obligatoires, notably in
their recent Public Reports ;
draft a medium-term taxation
strategy, in order to provide all stake-
holders with a predictable and suffi-
ciently stable framework ;
as part of this medium-term
strategy, which must necessarily aim at
reducing Government deficits and
improving competitiveness :
begin phasing out labour-based
financing of public policy measures
that are not directly relate to the enter-
prise in favour of universal financing
by society as a whole;
to this end utilise, in particular,
the leeway derived from reducing tax
and social contribution breaks, as well
as from identified opportunities rela-
ting to consumption and environmen-
tal taxation;
analyse their impact on wealth
redistribution and consider, if appro-
priate, the necessary support measures,
such as changes to the social benefits
offered or a progressive tax scale.
The comparison also led to
make two recommendations regar-
ding upcoming steps for the joint
pursue and deepen the technical
re-examination, on the part of both
administrations, of the corporate tax
base, with a view to gradual harmoni-
incorporate tax policy orienta-
tions into the coordination of French
and German economic policy, recogni-
sing the pivotal role played by the
Franco-German Economic Council.
Lastly, the comparison has confir-
med the merits of certain recommen-
dations made previously by the Cour
des Comptes aimed at ensuring more
coherent financial management for
central and local government and
social security.
Summary of Main Recommandations
of the Public Thematic Report of the
Cour des comptes
For this management to be suc-
cessful, the overall strategy must be
Programming Act that :
takes precedence over existing
Finance Acts and Social Security
Finance Acts;
contains the principle that no
deficit in social security accounts shall
be allowed.