Mayors tempted by an increase in property tax rates in 2023

The announcement of a 52% increase in property tax in Paris a few days ago surprised many, with Mayor Anne Hidalgo saying she was forced, "due to systemic crises", to go back on her promise the country.

With a rate of 13,5% of built land in 2022, the capital is nevertheless the major city in France where the rate is the lowest.

Caught between soaring energy prices and revenues which are increasing much more slowly, town halls could use the property tax to achieve the goal of balanced budgets to which they are bound.

Questioned by AFP, the Ministry of Public Accounts had no figures available for 2022, while the rates for 2023 are not yet known, the communities having until April 15 to adopt their budget.

In an interview Thursday with L'Est Républicain, the Minister of Public Accounts Gabriel Attal believes, however, that "the anti-inflation shield (...) implemented for the French should not be cracked by an explosion of the local taxation".

In fact, a study published in May by the firm FSL, which questioned the communities, shows that the property tax increased by an average of 1,4% on January 1, 2022 in the 190 French cities of more than 40.000 inhabitants.

This increase is concentrated in cities with more than 100.000 inhabitants, where the rate rose by 1,9%. It is particularly marked in Marseille (+14%) and Tours (+11,6%).

"This is the largest increase observed since 2010 even if this resumption of the use of taxation comes after five years of very strong tax moderation", specifies the study.

Mechanical rise

According to the National Union of Property Owners (Unpi), the property tax as a whole (base and rate) increased by an average of 4,7% between 2021 and 2022 in the 200 largest cities in the country.

In particular, the calculation of the tax itself, the base of which is indexed to inflation, leading to a mechanical increase in cadastral rental values ​​of 3,4% in 2022.

"This is the strongest revaluation since 1989", underlines the Unpi, which alerts on a possible tilting of certain owners under the poverty line.

"For 2023, even before any decision by the communities on their rate, owners should expect their tax base to increase like inflation the year before, not very far from 7%", warns Thomas Rougier, secretary general of the Observatory of local finances.

A mechanical increase which could curb the inclinations of mayors, assures Claire Delpech, member of Intercommunalities of France, who has not observed a massive upward trend in property tax revenues in 2022.

According to Pierre Breteau, co-chairman of the finance commission of the Association of Mayors of France (AMF), it is still "too early" to identify a trend for 2023.

“Given the uncertainties that weigh on the evolution of the expenses of the municipalities, we are mainly witnessing a postponement of the votes for the 2023 budget”, he indicates, recalling that the mayors can also choose “to save on their expenses of operation or reduce their investment".

"We feel that the mayors would like to avoid using the tax lever, but those who are in tight financial situations could do so because the municipalities are subject to a rule of budgetary balance", he recognizes despite everything.

Since the disappearance of the housing tax on main residences, some elected officials are reluctant to have the dynamics of their expenses weigh solely on the owners.

"A significant increase in the property tax in 2023 would show the French people that the abolition of the housing tax is an illusion, because the government has taken away from communities a very significant source of revenue and that State grants do not follow. not inflation", notes PS senator Rémi Féraud.