The French Tax Burden: Is it all worth it?

Richard Mason // 27 July 2018

French workers shoulder a far greater tax burden than the rest of their European neighbours. While the rest of the continent celebrated their Tax Freedom Day weeks or even months ago, the French have only just gotten to theirs – 45 days later than the average.

What exactly is Tax Freedom Day? Tax Freedom Day is the date when the average employee theoretically stops paying taxes and social security contributions and can choose how to spend the fruits of his or her labour. For instance, Cypriots had the earliest celebration this year, with their workers only having to work up until the 27th March to pay their share. Most European countries had their day at some point in June.

Why, then, do the French have to work so much later to support their social and fiscal burden than everyone else? And are they really seeing the benefits of this?

First, let’s look at just how much more a French worker will have to pay to the state than the average European. According to the Institut économique Molinari (IEM), France is one of the six countries in which a worker pays more than half of their gross salary as social security contributions. The weight of this tax burden has resulted in the average French worker, the 6th highest paid in the EU, to fall to 11th place when it comes to purchasing power.

To put this into perspective, a French worker now has 21% less purchasing power than his or her Swedish counterpart, and 33% less than someone in Denmark. This is despite being paid, on average, better than both.

In spite of this gargantuan tax burden, French public services have become plagued by strikes. For instance, government-run monopoly French rail company SNCF have undertaken a series of strikes since April 2018, the longest dispute in 30 years. In May, all major public service sectors took part in a huge strike against the President, Emmanuel Macron.

Moreover, unemployment in France remains ‘abnormally high’ and slow to fall, according to the IEM’s Reseach Director Nicolas Marques. Growth is also slow, while the public debt and deficit remain troublingly high. Evidently, the 56% paid by a French worker from his or her salary is not being used to ease the issues currently affecting the republic.

France also comes in at 11th place in the OECD’s Better Life Index, 17th for unemployment, and 12th for overall life satisfaction, suggesting further that higher taxes and contributions to social security do not necessarily improve the quality of life in France. Meanwhile, countries with lower degrees of social burden experience life of a greater quality.

Thankfully, there is some silver-lining to be found here. While undoubtedly high, the French tax burden is beginning to decrease in size. 2018 marks the start of decreasing taxation in the country, a trend which we can hope to see more of in the years to follow. Hopefully, French workers will soon have to shoulder a far smaller burden and be allowed to keep for themselves far more than 44% of their paycheck.

Let’s hope that the French can celebrate Tax Freedom Day a little earlier next year!

You can download the full IEM publication on Tax Freedom Day here.

All opinions expressed in this article belong to the author only and are not necessarily endorsed by EPICENTER. 

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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