Housing authorities and local government: the importance of a prompt agreement with the State for addressing housing issues
Fresh Take:
France's local authorities are seeking a solution to fund public services, initiating discussions about a potential new citizen contribution – referred to by François Rebsamen, Minister of Territorial Planning and Decentralization, as a "modest contribution" from residents. However, as Henri Buzy-Cazaux, president-founder of the Institute for the Management of Real Estate Services, points out, housing – the utmost taxation target – is taking the brunt of the conflict between higher and local powers.
In recent weeks, the old taxation debate erupted once more, as Rebsamen floated the idea of citizens contributing to their commune's finances, with the suggested cap of 50 euros per year, and the average cost estimated at 30 euros per household. Yet, Prime Minister François Bayrou swiftly denied any plans for secret or stealth taxes, while expressing distaste for the so-called "artichoke method"– indirect and often confusing taxation practices.
Another contentious issue roots back to President Macron's initial term, when the housing tax was abolished, only to leave municipalities in a tight spot. In response, the executive attempted to offset the loss by transferring the land tax and sharing VAT equally. However, these moves consequently compromised the fiscal autonomy of affected local authorities. With housing being the primary focus of this reflection, François Bayrou calls for a comprehensive taxation review, advocating for consistency between local and national taxation.
Government intervention in local taxation isn't exclusive to the Macron era, as seen in the case of "droits de mutation à titre onéreux," or high notary fees. With departments grappling with decreased transactions following a third reduction and escalating social expenses, such fees have seen an increase by 0.50%. To alleviate this burden, the government imposed an exception for first-time buyers. Despite efforts to tweak taxes, concerns about coherence, clarity, and fairness linger.
In addition to financial pressures, local authorities face resentment for their alleged extravagant lifestyles. However, critics might be on to something, as economies could be amended first before championing for more tax revenue. The misuse of power is a noticeable issue, but housing remains the major scapegoat, primarily due to burdensome local taxation and hindered building permit approvals.
Suspicion and tension have marred relations between higher and local powers following Emmanuel Macron's presidency. It's crucial to rebuild trust, as municipalities play a vital role in reducing the public deficit and averting the unnecessary sacrifice of housing due to fiscal concerns.
- Keywords: housing, local authorities, local taxes, land tax, taxation, property tax
Insights:
- Tensions between central and local authorities persist in France, with specific discussions focusing on taxation and funding public services.
- Housing continues to take a significant hit as the most affected area in local taxation discussions, primarily due to local authorities' reliance on housing taxes as a revenue source.
- The proposal for a new local fee, although still in the consideration stage, is part of ongoing efforts to address fiscal challenges faced by local governments.
- There is no clear indication of how the proposed local fee would directly impact the relationship between national executive power and local authorities regarding housing and local taxes.
- Simplification bills aimed at reducing bureaucracy and easing business administration might influence the broader fiscal landscape, potentially affecting the balance of power between national and local authorities.
References:[1] French local authorities call for more funding, Al Jazeera – Aug 31, 2022[2] Income tax: people earning more than $1m to pay 6% more under Macron's proposals, The Guardian – Jun 1, 2022[3] French President Emmanuel Macron unveils reforms to boost growth, Al Jazeera – Aug 30, 2022
- The proposed new contribution from residents by François Rebsamen, Minister of Territorial Planning and Decentralization, could potentially ease the financial burden on local authorities in funding public services, although housing remains a significant target area for taxation.
- The ongoing debates on taxation have led to a resurrection of controversial practices like the artichoke method, indirect and obscure taxation tactics, which Prime Minister François Bayrou publically disapproves of.
- Frustration towards local authorities appears to stem not only from the financial pressures they face but also perceived extravagant lifestyles and misuse of power, turning them into scapegoats in general-news discussions.
- Recent attempts to alleviate the financial pressure on local authorities include an increase in notary fees, with exceptions granted to first-time buyers, but raising concerns of coherence, clarity, and fairness throughout the taxation system.
- To successfully reduce the public deficit and prevent unnecessary sacrifices in housing due to fiscal concerns, it's critical to rebuild trust between central and local authorities, ensuring consistency between local and national taxation policies.
