In 2023, the removal of housing tax for main residences reduced the burden on many households, but the measure also dug a financial hole in the coffers of municipalities of almost €20 billion. Faced with significant budget deficits and property tax increases that are no longer sufficient, the government is considering a “universal territorial contribution” (ČVUT). This measure, supported by some political figures, would aim to rebalance local resources through the contribution of owners but also tenants.
A proposal for a universal territorial contribution to compensate for the deficiency
The abolition of housing tax on main residences was seen as a victory for French households. However, the Association of French Mayors points out that this decision has deprived local authorities of a vital source of funding. “Even with a 33% increase in property taxes over ten years, we are not able to close this gap,” notes the association. This increase in real estate tax, which sometimes reaches dizzying proportions in some municipalities, was not enough to compensate for the 20 billion euros in lost revenue per year. The budgetary situation is becoming critical for local authorities, which also face an additional reduction of five billion euros in their budget in 2025.
Catherine Vautrin, Minister for Partnerships with the Territories, introduced the idea of a Universal Territorial Allowance to tackle this funding crisis. According to her, it is necessary to provide communities with financial leverage that will allow them to meet the needs of their territory. “Society must regain the power to act and better control its revenues,” his office suggests, thus expressing a desire to re-establish some fiscal autonomy. For the government, the ČTÚ could be a way to make up the deficit and secretly re-introduce a form of housing tax.
Controversial universal tax between support and criticism
Unlike the old housing tax, the ČTÚ would be “universal” and would affect not only owners but also tenants, making the contribution to local infrastructure and services fairer. André Laignel, the mayor of Issoudun and a supporter of the measure, believes that this new allowance could be moderate for low-income households. “The amount could be just a few euros a month for low-income households,” he says. He adds that it might be possible to introduce a deduction from income tax to avoid creating a tax surcharge. According to him, this approach would make it possible to restore a strong link between citizens and their community to make their contribution to local public services visible.
However, this initiative arouses strong opposition, especially from Eric Woerth, the former Secretary of the Economy, who does not hesitate to express his disapproval. “It is quite unbearable to hear those who bankrupted France telling us how to get out of it by taxing the communities,” he criticizes. In addition, he condemns what he perceives as a hidden additional tax burden. For opponents, the ČTÚ could increase the financial burden on households without guaranteeing effective management of the selected funds. So the debates surrounding this post are far from over and should fuel policy discussions in the coming months.
The ČTÚ proposal enjoys as much support as criticism. While some see this as a viable solution to stabilize community finances, others decry the attempt to return the housing tax in another way. The future of the proposal therefore remains uncertain and could well become central to the tax debate in France, whose economy is threatened by an unprecedented tax hike that reflects the tension between budgetary imperatives and the social acceptability of the tax.
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A graduate of Sciences Po Toulouse and holder of the blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. Every day I try to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations and put into perspective the economic and social problems of this ongoing revolution.
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