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French Court Of Auditors Criticizes Tax Breaks

Monday, February 15, 2010

According to the French Court of Auditors, the country’s record deficit is not only due to the economic crisis, but also to the fact that the government has not sufficiently maintained control of public spending in order to offset both a reduction in taxes and the introduction of additional tax breaks or “niches fiscales”.

In its 2010 annual report, the Court underlines the need to rapidly reduce the structural deficit to enable the government to weather future economic crises. In order to achieve this goal, the Court emphasizes the need to increase fiscal revenue, and points out that the plethora of tax breaks available in France, which serve to reduce vital income, must urgently be reviewed.

The Court also recommends a systematic reduction of the ceiling applied to both tax reductions and tax credits, and notes that an increase in social levies is particularly necessary to end spiraling social debt.

In its response, the government confirmed its intention to assess existing tax breaks available in France, in order to ascertain whether or not they should be maintained. It also noted that a report into the efficiency of current fiscal spending and tax breaks would be submitted to parliament by summer 2011. This assessment will enable the government to accurately adjust existing measures in place in an efficient and lasting way, it concluded.