French tax hikes tapped out, spending cuts inevitable, says audit office

The French Court of Auditors announced in Paris on May 15, 2023, that the country has exhausted its capacity for further tax increases, making spending cuts unavoidable as France faces mounting fiscal pressures. The independent government audit body's annual report highlighted that years of successive tax hikes have reached their limit, leaving little room for additional revenue generation without harming economic growth. The court's assessment comes as France struggles with a persistent budget deficit and growing public debt that now exceeds 110% of GDP, forcing policymakers to confront difficult choices about reducing expenditures rather than increasing taxes. The report specifically noted that the tax burden on French households and businesses is already among the highest in the developed world, with tax revenues accounting for approximately 46% of GDP. Without significant spending reductions, the audit office warned, France risks failing to meet EU fiscal targets and could face economic stagnation as high taxes continue to discourage investment and consumption.