Participatory tax: Could French taxpayers soon choose where taxes go?

Taxpayers in France could soon choose where part of their taxes go, under a new proposal from outgoing Prime Minister Gabriel Attal.

The proposal, which Mr Attal sent to the chairs of parliamentary groups on August 12 (except to the Rassemblement National and La France Insoumise), states that it would give every taxpayer in France “the option of earmarking part of their income tax, or an additional contribution, to a freely chosen area of the state budget”.

The proposal came as part of a series of new measures designed to serve as a basis for “dialogue” between the political forces, to “find a new way forward in the National Assembly”, in the absence of an absolute majority, said Mr Attal.

Participatory taxation (l'impôt participatif) would see taxpayers choosing to allocate a portion of the income tax they usually pay to a particular area of the national budget. 

It could also take the form of a separate tax paid as a donation in favour of a public policy that they particularly support (education, environment, healthcare, etc.).

Chequered support

Yet, it remains to be seen whether the measure will win support in the Assemblée. 

Last year, Socialist MP Christine Pirès-Beaune proposed a bill that would give taxpayers the option to direct 5% of their tax to a specific budgetary project, but this proposal was rejected in the chamber.

This idea was also proposed by Eric Woerth (formerly of Les Républicains, now in Macron’s party), then-chairman of the National Assembly's Finance Committee, in 2018.

At least one high-profile MP is outwardly against the proposal. Eric Ciotti, president of the Les Républicains party and departmental councillor for Alpes-Maritimes, has said that the “Gabriel Attal's participatory tax is a disguised tax increase”. 

Instead, he called for “lower taxes and charges”, in a post on X (Twitter). 

Some critics of the idea have also said that a participatory tax could be detrimental to certain public policies that they consider to be essential but which are not necessarily the best known or supported by the general public. 

Others say that it could lead to richer people being able to donate more towards policies that they support, with those less well-off unable to do the same, leading to unfair funding of some policies.

The idea of participatory taxation is not new. It has existed for almost 40 years in Italy, where taxpayers are able to allocate 0.8% of their income tax to the public policy of their choosing.