This op-ed was first published in the French newspaper Les Echos, with the title Niches fiscales: “Il est temps de faire un grand ménage”
The state of France’s public finances is worrying. The public deficit has rarely been so high outside periods of crisis, and public debt has reached record levels. Stabilising it will require a substantial adjustment—on the order of €120 billion to €150 billion. The 2026 Draft Budget Law provides for a structural effort of around €30 billion. Even if fully implemented, the situation will remain worrying, and no policy option should be ruled out.
During the presentation of the 2026 budget, Minister Amélie de Montchalin proposed reviewing “tax expenditures” – the provisions allowing taxpayers to reduce their taxes through preferential rates, exemptions, or tax credits. Even when sometimes justified by legitimate policy objectives, these measures carry a significant fiscal cost. France currently counts 465 such provisions, costing an estimated €92 billion in 2025 according to the annexed report to the 2026 Draft Budget Law (or €105 billion if using the more appropriate methodology applied by the Ministry of Finance up to 2023, particularly for VAT-related measures).
Also known as tax breaks, tax reliefs or tax loopholes, the use of tax expenditure is not unique to France. Their accounting methods vary across countries, but a global database compiled by the Council on Economic Policies and the German Institute of Development and Sustainability (IDOS), based on official data, allows cautious international comparisons. Germany records only 160 such provisions at a total cost of €34 billion, while Italy lists no fewer than 625, amounting to €105 billion.
Each year, the French government publishes a report quantifying forgone revenue in an annex to the Draft Budget Law. Yet these estimates are far from perfect. Reliability is good or very good for 272 tax expenditures, while 193 are classified as non-quantifiable or only indicative of an order of magnitude.
The idea of cleaning up tax expenditures is not new, but previous governments have failed to deliver. The 2026 Draft Budget Law proposes to abolish 12 tax expenditures and reduce the cost of 11 others, for total savings of about €2.5 billion. It is a good start, but that would still leave 453 provisions costing €90 billion annually (or €103 billion under the previous methodology).
Several countries have made progress by introducing maximum lifespans or sunset clauses for tax expenditures or, better still, by making their renewal conditional on a positive evaluation – an approach rarely applied in France. Other countries, such as Germany and the Netherlands, and even lower-income nations such as Benin, do a better job than France when it comes to evaluating their tax expenditures.
Tax expenditures are costly and of uncertain effectiveness. They complicate the tax system and generate substantial administrative burdens. A thorough overhaul is therefore urgent – even if every tax break seems to have its own guard dog.
A good starting point would be to evaluate the effectiveness of the eight most expensive tax expenditures, which together represent about 40 per cent of total revenue forgone. Is the research tax credit (€8 billion) truly the best way to support innovation? Is the home-employment tax credit (€7 billion) the most effective tool to sustain household services? Are the reduced VAT rates for restaurants (€5 billion) and for home-maintenance works (€5 billion) justified by their results?
One thing is clear: France can no longer afford to ignore the potential of a major clean-up of its tax expenditure regime. The next presidential election could provide the occasion for a national debate on this crucial issue.
Read more on this topic ¦ Tax Expenditures Country Report: France