Global Daily Tax News, Ambitious Tax Reform Required In France, Says OECD, (Jul 9, 2026)

The OECD has called on French authorities to drastically rethink the nation's tax regime, in its newly released Economic Survey report for the nation, to spur stronger economic growth and support fiscal consolidation efforts.

The report notes France's tax-to-GDP ratio is among the highest in the OECD at 43.5 percent in 2024, around 10 percentage points above the OECD average. Meanwhile, between 2008 and 2025, France's fiscal deficit widened from 3.5 percent to 5.1 percent of GDP. French authorities are now seeking to reduce the deficit, but the OECD said the scale of fiscal consolidation calls for a sequenced and comprehensive package.

The OECD said the tax system is complex, with many loopholes and tax expenditures, reducing its transparency and efficiency. It said: "The French tax system is characterised by a narrow base, heavily concentrated on social security contributions, while other taxes as a share of GDP, remain close to the OECD average."

"Due to the need to consolidate, France has limited room to reduce taxes in the short term. It can, however, adopt a sequenced strategy. To begin with, measures can be taken to broaden the tax base and reallocate taxes and tax incentives to rebalance the tax mix and increase the efficiency of the system. Then, once spending has been reduced, a reduction in the rates of the most distortive taxes will help to boost investment and employment," the OECD said.

Specifically, the OECD has recommended: "The tax system could be more efficient, growth-friendly, and inclusive. The labour-heavy tax burden could shift towards broader-based taxes or taxes that are less detrimental to growth (such as consumption or property taxes)."

The OECD said France should consider:

• Phasing out ineffective tax expenditures and reducing the rates of the most distortive taxes;

• Revising research and development tax credits for large firms, and better targeting reliefs;

• Raising and broadening carbon prices, to cut emissions and raise revenues for investment, in particular by aligning the tax rates between diesel and gasoline, and introducing congestion pricing;

• Aligning taxes on retirees and workers and removing retirees' 10 percent income tax allowance; and

• Revising wealth taxation, to strengthen intergenerational equity, particularly through a review of inheritance taxes and tax on unrealized capital gains.

The OECD said: "France has shown resilience to recent global shocks, but GDP per capita growth is lagging that in leading OECD economies. Further increasing the employment of older and younger workers, alongside stronger industrial competitiveness, would enhance France's growth potential. This calls for more effective innovation policies, increased investment in skills, and lower production taxes. It also requires stronger resilience to supply chain risks, the decarbonation transition, and rapid technological change. Putting the public debt ratio on a clear downward path is another pressing priority. This will require greater spending efficiency and phasing out ineffective tax expenditures, while reducing the most distortive taxes."