Hospital admissions, 2015¹ In-patient curative and rehabilitative care, 2015¹ Average effective corporate tax rates¹

ASSESSMENT AND RECOMMENDATIONS OECD ECONOMIC SURVEYS: FRANCE © OECD 2017 29 Simplifying the tax system and the framework of environmental regulation The tax system is complex, with a large number of frequently changing exemptions and credits, making for high compliance and collection costs. For example, firms are subject to 233 different taxes. Taxes on production, such as the contribution sociale de solidarité des sociétés levied on firms’ turnover and the cotisation sur la valeur ajoutée des entreprises levied on firms’ value added, which directly affect profit margins, are particularly onerous: 3 of GDP, compared to 1 in Spain and 0.4 in Germany European Commission, 2017. Eliminating taxes, reducing rates and broadening bases should continue to be a priority. The corporate income tax combines high rates, which differ by firm size, with a low yield, creating financing distortions, despite measures taken in 2013 to limit the deductibility of interest, and obstacles to investment, firm entry and productivity growth Figure 14. Reducing the statutory rate to 25 from 33.3, as promised by the new government, is desirable, as is broadening its base Conseil des prélèvements obligatoires, 2016. The effectiveness of generous RD tax credits would be worth further examination. New rules could be introduced to limit the possibility for firms to carry back their losses, while further cutting corporate rates to promote innovation spending OECD, 2014c. The reduced corporate rate for SMEs can be a barrier to firm growth, as small firms may shy away from growing beyond the threshold for the reduced rate. It should be reconsidered. Limiting the role of earmarked social contributions would make the tax system simpler and more employment-friendly. More than a third of revenues are labour taxes – mainly social contributions. This is high in international comparison Figure 15 and undermines incentives to work and hire. Recent cuts in social contributions on low wages are welcome, as studies show that this is likely to promote employment Cahuc et al., 2014. Yet, these measures combine a tax credit, the credit d’impôt pour la competitivité et l’emploi CICE, paid with a year’s lag, and reductions of contributions with different withdrawal rates, a complex set-up that can limit effectiveness. In fact, early evaluations of this tax credit have shown benefits that may take some time to materialise but are already perceptible. The CICE monitoring committee France Stratégie, 2017 reports a positive impact on employment in Figure 13. Hospital admissions and spending on in-patient care are high 1. Or nearest available year. Source: OECD 2017, OECD Health Statistics Database. 1 2 http:dx.doi.org10.1787888933577192 50 100 150 200 250 300 MEX CHL PRT ESP ITA NLD ISL JPN GBR IRL NZL SWE LUX DNK KOR ISR OECD BEL TUR FIN CHE POL AUS EST SVN FRA LVA NOR GRC SVK HUN CZE DEU AUT

A. Hospital admissions, 2015¹

Per 1 000 inhabitants 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 LVA MEX CZE KOR EST PRT CAN ISR SVK HUN POL ESP GBR SWE OECD FIN IRL SVN ITA AUS NOR DNK BEL USA DEU NLD JPN CHE FRA GRC AUT

B. In-patient curative and rehabilitative care, 2015¹

Per cent of GDP ASSESSMENT AND RECOMMENDATIONS OECD ECONOMIC SURVEYS: FRANCE © OECD 2017 30 2013 and 2014, amounting to between 50 000 and 100 000 jobs created or saved. Reducing social contributions across the board while giving progressive income taxes a bigger role would be a simpler way to lower labour taxes on low wages. Many expenditures for which social contributions are currently earmarked benefit society as a whole and would be better financed from the general budget, for example those for families, training, social housing and non-contributory health insurance. Figure 14. High corporate tax rates go along with low revenues 1. Difference between the pre-tax and post-tax net present values of a one-period investment in each country, computed by taking into account existing tax allowances and statutory rates and assuming a given rate of return, scaled by the present value of the income stream. The one-period investment is a composite of four assets plant and machinery, buildings, intangible assets and inventories financed by debt and equity. 2. Or latest year available. Source: Oxford Centre for Business Taxation 2017, CBT Database; OECD 2017, OECD Revenue Statistics Database. 1 2 http:dx.doi.org10.1787888933577211 Figure 15. Taxes on labour remain high 1. The tax wedge corresponds to income tax plus employee and employer contributions less cash benefits. 2. At 67 of the national average wage. Source: OECD 2017, OECD Taxing Wages Database. 1 2 http:dx.doi.org10.1787888933577230 5 10 15 20 25 30 35 40 IRL SVN CZE POL TUR CHE ISL FIN KOR GBR HUN NLD SVK SWE DNK ISR AUT OECD NOR CAN EST ITA LUX CHL PRT GRC NZL MEX AUS DEU ESP BEL JPN FRA USA

A. Average effective corporate tax rates¹

Per cent, 2016 1 2 3 4 5 SVN LVA TUR DEU POL HUN GRC ITA EST FRA FIN USA AUT ESP GBR DNK IRL NLD OECD ISL SWE ISR CHE CAN PRT KOR MEX BEL SVK CZE JPN LUX NZL NOR AUS CHL

B. Corporate income tax revenues