France: The CTU, a new disguised tax for tenants and owners?

In 2023, the elimination of the housing tax on main residences had reduced the burden on many households, but this measure also dug a financial hole of almost 20 billion euros in the coffers of communities. Today, faced with significant budget deficits and an increase in property taxes that are no longer sufficient, the government is considering a “universal territorial contribution” (CTU). Supported by certain political figures, this measure would aim to rebalance local resources through the contribution of owners, but also tenants.

The proposal for a universal territorial contribution to make up for a shortfall

The abolition of the housing tax on main residences was seen as a victory for French households. However, the Association of Mayors of France emphasizes that this decision deprived local authorities of an essential source of financing. “Even with a 33% increase in property taxes in ten years, we are unable to fill this gap,” notes the association. This increase in property tax, which sometimes reaches dizzying proportions in certain municipalities, was not enough to compensate for the 20 billion euros annually in lost revenue. The budgetary situation is becoming critical for local authorities, which are also facing an additional reduction of five billion euros in their budget in 2025.

To deal with this funding crisis, Catherine Vautrin, Minister of Partnership with the Territories, introduced the idea of ​​a universal territorial contribution. According to her, it is imperative to give communities financial leverage that allows them to meet the needs of their territories. “Communities must regain the power to act and better control of their revenues”, noted his cabinet, which thus relays a desire to re-establish a certain fiscal autonomy. For the government, the CTU could be a way of making up for the shortfall and reintroducing, in a disguised manner, a form of housing tax.

A controversial universal tax, between support and criticism

Unlike the old housing tax, the CTU would be “universal” and would affect not only owners, but also tenants, which thus makes the contribution to local infrastructure and services more equitable. André Laignel, mayor of Issoudun and supporter of the measure, considers that this new contribution could be moderate for low-income households. “The amount could represent only a few euros per month for low-income households,” he says. He adds that it could be possible to introduce a deduction from income tax to avoid creating a tax surcharge. According to him, this approach would make it possible to renew a strong link between citizens and their community, in order to make their contribution to local public services visible.

However, this initiative arouses strong opposition, notably from Eric Woerth, former Minister of the Economy, who does not hesitate to express his disagreement. “It is quite unbearable to hear those who bankrupted France telling us how to get out of it by taxing communities,” he criticizes. In addition, he denounces what he perceives as a disguised additional tax burden. For opponents, the CTU could increase the financial burden on households, without guaranteeing effective management of the funds collected. The debates around this contribution are therefore far from over and should fuel political discussions in the months to come.

The CTU proposal attracts both support and criticism. While some see it as a viable solution to stabilize community finances, others denounce an attempt to bring back the housing tax through another means. The future of this proposal therefore remains uncertain, and it could well become a central point of the tax debate in France, whose economy is threatened by an unprecedented tax increase, which reflects the tensions between budgetary imperatives and social acceptability of the tax. taxation.