Taxation in France - Public Finances

Public Finances

The public deficit amounted to 2.9% of the GDP (€ 50.6 billion) in 2007 compared to 0.2% on average in the euro zone, excluding France. The actual deficit may exceed the threshold of 3% if the situation deteriorates. The public debt amounted in 2007 to 63.9% of GDP, which represents 47 000 € per person employed. Public debt has increased in the last years, and the expenditures to repay the interests have reached 52 billion € in 2007 or 2000 € per person in employment.

The deficit of social security administrations remains at € 11bn, but the corresponding debt ("social debt") has increased. The deficit of local administrations is still limited, but amounted to 7 € bn in 2007, as a result of a spending growth significantly higher than that of the revenue in the recent years. As for the net tax revenue of the central government, it remained in 2007 at the same level as in 2004, whereas the total revenues rose by 51 billion € since 2004, because of increasing transfers of reveues to social security and local authorities to reduce their deficit (€70 bn in 2007). In 2007 France's central government took in revenues of approximately €272 billion and had expenditures of €354 billion. Overall, the government registered a deficit of approximately €42 billion.

Although deficits have been commonplace, efforts have been made in recent years to cut back the growth of taxes and government spending. Deficit reduction became a top priority of the government when France committed to the European Monetary Union. The Maastricht Treaty targets for the EMU required the members countries to reduce the government's budget deficit to 3% of GDP and the public debt to 60% of GDP.