At the start of the 2023 school year, the property tax should experience its largest increase since 1986. After having already increased by 3.4% last year, it will rise to 7.1% this year. Once again, the main cause of this exceptional increase is none other than inflation.
This local tax is claimed from any owner of an apartment or house and is calculated on the level of theoretical annual rent that the owner could produce if the accommodation were rented. In France, 58% of residents own their main residence. This tax is reassessed every year according to the INSEE consumer price index. This year, it is its additional adjustment to inflation of 4.5% over 1 year in June, which takes it to the level of +7.1%.
That’s not all: municipalities too can and will increase this local tax, according to rates that are added to the national increase. Last year, the property tax had thus increased by 23.9% in Poissy, 19% in Martigues or 16% in Tours. This year, according to the president of the Association of Mayors of France, almost one in five municipalities with more than 40,000 inhabitants will increase the property tax this year. This year, these local increases are expected to be even higher, as cities are subject to ever-increasing expenses, in particular because of energy prices which exploded with a 15% increase last February, followed by a increase of 10% this month of August.
Upheaval of local taxation
At the local level, the increasingly steep increases are partly explained by upheavals in the taxation of communities, such as the gradual abolition of the housing tax. Decided by Emmanuel Macron during his first mandate in 2018, this measure has greatly reduced the fiscal autonomy of municipalities (it still represented 20 billion euros in revenue in 2020), which seek to compensate for it through property tax. In addition to this, the abolition of half of another local tax, the “Contribution on the added value of businesses” (CVAE) in 2022, has added fuel to the fire on the side of the communities, which see the number of local taxes slashed by the State while the demand for public services continues to grow.
In Paris this year, the local increase should thus explode to reach 52% (that is to say 59% once added to the national increase). According to Anne Hidalgo, this increase in the property tax in the capital will allow the town hall to invest an additional 1.2 billion euros by the end of its mandate, in 2026. So far, the property tax in the capital was rather below the average for large cities (32%) with just over 20%.
Other cities are planning significant increases, even if not as spectacular: In Grenoble, for example, the City Council has already voted 25% (so 32% once added to the new national rate). The city of Metz meanwhile voted 14.3% increase, or 9% for Lyon. Other cities, such as Toulouse or Lille will not apply a revaluation of the property tax apart from that decided by the State.