It’s the unpleasant surprise of the start of the school year. By opening their tax notice, the owners discovered the amount of the property tax. Overall on the rise, it has sometimes soared. Taxpayers have until October 21 to pay this local tax which had brought in 37 billion euros in 2022 to communities. How to explain such an increase? Response elements.
Which municipalities are affected by the property tax increase?
The entire territory is affected, since the property tax is calculated based on the rental value of the property – theoretical annual rent that a property could generate if rented. This is indexed to inflation and has therefore been increased by 7%. This year.
But it may also be necessary to add, depending on your municipality, an additional increase voted by certain municipalities. “When you have your property tax increasing, it’s not the government, it’s your municipality that decides. And it’s a scandal when I hear elected officials who dare to say that it’s the government’s fault,” Emmanuel Macron defended on France 2 and TF1 on Sunday evening. This movement is mainly observed in metropolises and appears less marked in villages with fewer than 500 inhabitants. Be careful, however, of the magnifying glass effect, because only 14% of the 34,808 municipalities have activated the tax lever. “And in the majority of cases, the increase remains less than one point,” specifies François Ecalle, founder of the specialized site Fipeco.
Is the disappearance of the housing tax the cause?
We must be wary of preconceived ideas. The government, by abolishing the housing tax on main residences, has removed from municipalities a tool of budgetary autonomy. “The property tax remains the last tax over which they have complete control,” recalls François Ecalle. On the other hand, although they have lost their fiscal power, this reform has not weakened them on a budgetary level, the State committing to compensate for the shortfall to the nearest euro. The municipalities thus benefited from the share of the property tax formerly devolved to the departments and intermunicipalities, and received a fraction of the VAT revenue.
It is therefore appropriate to look elsewhere for the reasons for this outbreak. Unsurprisingly, inflation is among the culprits. The surge in energy costs and more generally the evolution of prices has affected the budgets of municipalities who must heat and light buildings, buy equipment, etc. Personnel costs have also increased under the effect of the revaluation of the civil service index point.
Does this increase mean that the municipalities are in the red?
According to a report from the Court of Auditors, the situation of communities is good. But this general observation masks significant disparities. 14% of municipalities do not achieve balance. Some mayors encounter difficulties in closing their budget, like Anne Hidalgo (PS) in Paris. The elected official therefore inflated the property tax, until then one of the lowest in large French cities, even if it meant deviating from… her campaign promise.