Centre for Tax Policy and Administration

Organisation for Economic Co-operation and Development

Growth-enhancing tax Reform in France:
Applying tax indicators commonly employed in
OECD Tax Surveillance work
Ana Cebreiro
Centre for Tax Policy and Administration
OECD
2
Higher tax burden (tax-GDP ratio) than OECD average
Source: Revenue Statistics 1965-2006 (OECD)
24
26
28
30
32
34
36
38
40
42
44
46
48
50
52
54
1975 1985 1990 1995 2000 2004 2005 2006
OECD Total EU 15 United States Japan Germany France Sweden
3
Share of revenues:
high proportion of SSC and low of PIT and CIT
Source: Revenue Statistics 1965-2006 (OECD)
0%
20%
40%
60%
80%
100%
B
E
L
C
A
N
F
I
N
F
R
A
G
E
R
I
R
L
I
T
A
J
P
N
N
L
D
N
O
R
S
P
A
S
W
E
S
W
I
U
K
U
S
Personal income Corporate income Social security Payroll
Property Goods and services Other
4
Highest CIT rate of all European OECD countries
The basic combined central and sub-central (statutory) corporate income tax rate given by
the adjusted central government rate plus the sub-central rate.
Source: www.oecd.org/ctp/taxdatabase
0
10
20
30
40
50
J
P
N
U
S
F
R
A
B
E
L
C
A
N
L
U
X
G
E
R
A
U
S
N
Z
L
S
P
A
M
E
X
N
O
R
S
W
E
U
K
I
T
A
K
O
R
P
R
T
F
I
N
N
L
D
A
U
T
D
N
K
G
R
C
S
W
I
C
Z
E
H
U
N
T
U
R
P
O
L
S
V
K
I
C
L
I
R
L
Top CIT rate 2000 Top CIT rate 2008
OECD average in 2000 and 2008
5
High CIT rate and Narrow CIT base (2005)
0
5
10
15
20
25
30
35
40
45
U
S
F
R
A
S
P
A
S
W
E
B
E
L
J
P
N
C
A
N
G
E
R
N
L
D
U
K
F
I
N
N
O
R
I
R
L
Statutory top CIT rate AETR METR
Source: Institute for Fiscal Studies
6
Low CIT revenues (2005)
Source: Revenue Statistics 1965-2006
0
5
10
15
20
25
30
G
E
R
F
R
A
I
T
A
S
W
E
F
I
N
B
E
L
S
W
I
U
K
N
L
D
C
A
N
S
P
A
I
R
L
U
S
J
P
N
N
O
R
Taxes on corporate income as % of total taxation
OECD average revenues (2005)
7
Tax Wedge:
High Employer SSC and relatively low PIT (2007)
Source: Taxing Wages (2007)
0
10
20
30
40
50
60
B
E
L
H
U
N
G
E
R
F
R
A
A
U
T
I
T
A
S
W
E
N
L
D
F
I
N
C
Z
E
P
O
L
T
U
R
G
R
C
D
N
K
S
P
A
S
V
K
L
U
X
N
O
R
P
R
T
U
K
C
A
N
U
S
S
W
I
J
P
N
I
C
L
A
U
S
I
R
L
N
Z
L
K
O
R
M
E
X
Personal income tax Employee SSC Employer SSC
OECD average tax wedge single taxpayer at
100% of the AW (0 children) in 2007
8
0%
10%
20%
30%
40%
50%
60%
70%
0%
10%
20%
30%
40%
50%
60%
70%
5
0
6
0
7
0
8
0
9
0
1
0
0
1
1
0
1
2
0
1
3
0
1
4
0
1
5
0
1
6
0
1
7
0
1
8
0
1
9
0
2
0
0
2
1
0
2
2
0
2
3
0
2
4
0
2
5
0
employer SSC as % of total labour costs employee SSC as % of total labour costs
average local income tax as % of total labour costs average central income tax as % of total labour costs
family benefits as % of total labour costs average tax wedge (sum of the components)
net personal average tax rate as % of gross wage earnings
Tax Wedge:
High Employer SSC and relatively low PIT (2007)
9
Low income tax progressivity
(single individuals in 2000 and 2007)
(T167-T67)/T167; average income taxes at 167% of the AW and at 67% of the AW; higher
numbers indicate higher progressivity
0
20
40
60
80
100
120
140
M
E
X
I
R
L
K
O
R
N
L
D
G
R
C
P
R
T
L
U
X
H
U
N
A
U
T
S
V
K
C
Z
E
S
W
I
J
P
N
S
P
A
G
E
R
S
W
E
F
I
N
I
T
A
C
A
N
F
R
A
B
E
L
U
K
N
O
R
U
S
P
O
L
A
U
S
D
N
K
I
C
L
N
Z
L
T
U
R
2000 2007
Statutory personal income tax progressivity: OECD average in 2007
10
Relatively low C-efficiency ratio (2005)
C-efficiency ratio: ratio of the share of VAT revenues to consumption divided by the
standard VAT rate, expressed as percentage.
0
10
20
30
40
50
60
70
80
S
W
I
J
P
N
I
R
L
*
N
L
D
F
I
N
N
O
R
S
P
A
G
E
R
S
W
E
F
R
A
U
K
B
E
L
*
I
T
A
Standard VAT rate C-efficiency ratio
OECD average C-efficiency ratio and standard VAT rate in 2005
11
Low Use of Environmental related taxes (2004)
0
1
2
3
4
5
6
7
8
9
10
U
S
C
A
N
J
P
N
S
P
A
F
R
A
S
W
I
B
E
L
I
R
L
G
E
R
U
K
S
W
E
N
O
R
I
T
A
F
I
N
N
L
D
environmental taxes as % of GDP
environmental taxes as % of total tax revenue
OECD average of environmental taxes as a % of GDP and as a % of total tax revenue
in 2004
12
Overall tax policy recommendations
Proposed tax cuts: the promotion of economic growth requires:
Reduction of the corporate income tax rate
Reduction in social security contributions, particularly those paid by employers
Wealth tax reform
These tax cuts can be financed by:
Corporate income tax base broadening
Reforming VAT
Moving to a more uniform VAT system (reduction in the exemptions,
increase/abolish the reduced rates)
Possibly increasing the standard VAT rate
Increased use of environmentally related taxes
Preventing an increase in inequality by:
Reduce the burden of CSG and CRDS on people with low incomes
Increase the progressivity of the personal income tax system at low and moderate
income levels (CSG, CRDS as well as personal income tax)
Other tax indicators that could have
been included in the analysis
Top tax rate on personal income
Marginal tax wedges (labour income)
Other compulsory payments indicators
Marginal effective tax rates (METRs)
(Top) tax burden on dividends and interest
(Top) tax burden on capital gains
Tax burden on investment in owner-occupied housing
Indicators on R&D tax incentives
Tax indicators that measure the incentives for self-
employed to incorporate, etc.
13
Centre for Tax Policy and Administration
Organisation for Economic Co-operation and Development
Thank you for your attention!
Ana.Cebreiro@oecd.org