The draft budget presented on Tuesday by the Lecornu government plans to reduce the corporate value added contribution (CVAE), a production tax, and eliminate it permanently in 2028, two years earlier than the previously planned deadline.
The draft budget plans to reduce the maximum CVAE rate from 0.28% to 0.19% in 2026, before reducing the tax to 0.09% in 2027. The Government estimates in the document that the reduction of the CVAE would mean 1.3 billion euros less revenue.
Production taxes “especially affect the French industrial sector,” the government emphasizes, estimating that “the level of production taxes in France continues to be significantly higher than that observed among our European neighbors, which weighs on the competitiveness of our productive fabric.”
A cost of 1,100 million euros
At the beginning of October, Sébastien Lecornu’s entourage indicated that “the Government wants a gradual elimination (of this tax) within three years, if our public finances allow it”, for an estimated cost “of 1.1 billion euros by 2026”. “This reduction of the CVAE is direct support for production in France.”
At the end of September, the mandatory rates council, an institution associated with the Court of Auditors and chaired by Pierre Moscovici, had instead requested the elimination of the social solidarity contribution of companies (C3S), another tax on production, estimating that it had “cascading effects” that penalized it for complex and transformed goods.
The organization and its president, however, specified that “the fiscal tool is not the main lever” to fight against deindustrialization, in relation, for example, to the availability of suitable land, access to transport networks, the cost of energy, environmental and social acceptability or even the availability of labor.
In total, the main taxes that are likely to affect industrial companies represented, in 2023, a total of 91 billion euros, the CPO further estimated.
Announced in 2022 by candidate Macron, the abolition of the CVAE was initially expected to disappear in its entirety in 2023. In an already complicated budgetary context, the Minister of the Economy, Bruno Le Maire, finally announced that the abolition would prefer to be extended over two years, the first half in 2023 and the second in 2024, before being interrupted in the very restricted context of the public finances.
Source: BFM TV
