Local taxes soar (and more on way)

PROPERTY owners’ representatives Unpi have denounced an “explosion” in the levels of local property tax paid by people in many parts of France.

A study of the taxe foncière paid by people from 2004-09 (this year’s comparative figures are not yet available) has shown many large communes put their part of the tax up at least a quarter, even though the consumer price index only went up eight per cent.

The tax (which is also collected by departmental and regional councils) is paid by people owning a given property on January 1.

Paris was the worst affected city, with the tax levied by its council up 65.5 per cent in the period (though it remains one of the cheapest cities overall, with an average bill of €500), while Marseille was up 45.11, Saint-Denis 32.4, Rennes 30.19 and Aix-en-Provence 29.02. Pau in the Pyrénées-Atlantiques put its part up least among France’s 50 biggest communes: 13.14 per cent.

The Bouches-du-Rhône council put its departmental part of the tax up the most (51.75), followed by Nord (44.5), Ile-et-Vilaine (38.86), Loire-Atlantique (36.7) and Cher (35.25).

However the council with the highest rise was the region of Languedoc-Roussillon, with a huge 90.59 per cent. Among the regional councils it was followed by Auvergne (70.9), Burgundy (60.09), Paca (59.46 per cent) and Ile-de-France (45.98 per cent).

Increases are the result of decisions by councils to raise the percentage rates that they apply to a theoretical rental value attached to each property, the valeur locative cadastrale (which itself is increased annually at a rate set in the budget, meant to account for inflation).

Unpi president Jean Perrin has denounced what he calls the “double tax penalty” that results. “Councillors, whether in a region, a town or a department, may declare that their own rises are in line with inflation, but, systematically, because of the increase in the budget, the rises in people's taxes are well above the consumer price index,” he said.

This could become worse in coming years in many parts of France, thanks to a planned reforms of the valeurs locatives cadastrales, which are still based on valuations made in 1970. This means that a block of flats that was considered luxurious in 1970 but is now run-down may be being taxed too much, but properties in areas that have since been gentrified are undertaxed. A revaluation is meant to start next year for business properties, and is expected to be rolled out to homes in following years. Unpi fears a “brutal” rise in taxes.

The concerns come also as there are fears of rises in the taxe d'habitation, which, from next year, will be collected only by communes, as opposed to communes and departments. The change is because the mairies have lost part of their funding as a result of reform of the taxe professionnelle (business tax).

The taxe professionnelle is being replaced by the contribution économique territoriale. This is as yet still poorly understood, but is thought it may bring in less to local councils, another factor that could cause higher tax in coming years. It is also feared that local taxes may continue to rise owing to cost-cutting plans to freeze central government aid to councils for three years, coupled with increasing decentralisation, with councils taking on some extra tasks. Communes and departments have also been making less money from their share of stamp duty on house sales in recent years.