The Organization for Economic Cooperation and Development (OECD) has recommended a number of direct tax reforms to build on the French Government’s efforts to improve the nation’s competitiveness in Europe. The report provides that the tax wedge (the cumulative burden of taxes on workers) in France is among the highest in the European Union.
The OECD has suggested that France continue to implement reforms to improve incentives to work and boost the quality of the workforce with a focus on youth employment. Specifically, the OECD has recommended reviewing the tax structure to remove distortions to business employment decisions.
For the corporate tax , the report states there is a obvious inconsistency between the high rate of corporate income tax and the modest revenues from it, due to a narrow tax base that tends to favor large businesses and certain sectors.
The OECD has estimated that these reforms, taken together, could boost France’s economic growth rate by 0.25 % over the next five years and by 0.33 % over the next ten. Some of this higher growth would come through an increase in employment.
