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Finance

Government net VAT revenue increased by 2.5% on an annual average from 2019 to 2020. As indicated in the sheet on forecasting revenue from compulsory levies, the growth in revenue from a tax results from ” legislative measures”. 

News and its“spontaneous development”

The new measures increased the VAT yield by € 7 billion over this period. Its spontaneous growth in VAT has averaged 2.2% annually over this period. It results above all from the evolution of taxable uses but may deviate from it due to a distortion of the structure of these taxable uses towards products subject to reduced rates.

The VAT / GDP ratio hardly changed between 2004 (7.1%) and 2018 (7.2%). It was a little lower at the start of the 2010s (6.7 / 6.8% of GDP). The s corp tax calculator had been and still is quite useful for the same.

International Comparisons

The product of VAT in relation to GDP in France is very close to the weighted average of the European Union at 28 (7.2%) and of the euro zone (7.0%) in 2019. 

  • As the rate of compulsory levies is higher in France, the share of VAT in the total compulsory levies in France (15.4% in 2018) is lower than in the European Union (18.2%). Only Italy has a lower share of VAT in its levies than France. Conversely, the Scandinavian countries are characterized by the importance of VAT and the low share of social contributions in their compulsory levies.
  • The taxable employment base is a little more extensive in France because other countries more often use the possibilities of exemptions offered by European directives.

On the other hand, the average tax rate for taxable jobs in France (14.8% in 2013) is lower than in other countries (17.9% in the European Union). This three-point difference results for 1.0 point from a lower standard rate, 1.3 point from a higher proportion of taxable jobs taxed at a reduced rate and 0.8 point from lower reduced rates in France [2] . A study published in July 2016 by the European Commission confirms this analysis.

Only five countries of the European Union have a standard rate below 20% in 2020, including Germany with a rate of 19%, five others have a rate of 20%, including the United Kingdom, and the rest have a higher rate, up to 25% in Sweden and Denmark. The European Union’s unweighted average standard rate is 21.5%.

France is characterized above all, in 2013, by an average of reduced rates (5.7%) lower than in the European Union (7.9%) and covering a more extensive base (35% of taxable jobs against 25% ).

Effects on Activity and Inequalities

Income Redistribution

VAT is often considered to have an anti-redistributive effect because it represents a share of the net disposable income of households [4] , which is all the greater the lower this income. According to a 2012 study by the Institute of Public Policy of the Paris School of Economics, this share is 14% for the 1st decile and 8% for the 10th decile.