Social VAT soon at the agenda?
In May 2025, François Bayrou declared himself open and favorable to the revision of the financing of the French social model, in particular via the possible establishment of social VAT, a measure today brought to the exam by the social partners.
“Work in France is not rewarded as it should be,” said Bayrou, indicating his intention to entrust social actors with the responsibility to study the mechanism further
bfmtv.com
“I am in favor”: Bayrou will let the social partners decide on the increase in VAT to finance social spendinghttps: //t.co/fkej2quy7d pic.twitter.com/5gGu0rA7wr
— BFMTV (@BFMTV) May 27, 2025
What is social VAT?
Social VAT is also to finance social protection by increasing VAT, offset by a reduction in social contributions (employees or employers).
Theoretically, this reform makes it possible to alleviate the cost of labor, strengthening the competitiveness of businesses and opening the way to higher net wages but also to distribute social funding on consumption, including imported products.
Foreign examples are regularly mentioned: in Germany, an increase in VAT has already funded equivalent contributions of contributions, without major repercussions on inflation. Denmark had carried out a similar experience in the late 1980s.
The advantages of such a measurement reside in the stimulation of competitiveness by reducing labor cost, in employment support, especially in the high -intensity sectors of mainstream and in better contribution to social protection, even on the part of consumers.
Basically, the financing of social protection is no longer based on work but on consumption and in an open world where it is the competition of everyone with everyone, it is quite logical not to penalize the cost of labor and therefore to migrate the cost of labor to consumption!
Social VAT remains criticized as being a redistributive measure unfavorable to modest households, since VAT is a tax proportional to consumption which causes political opposition, in particular on the side of the unions (CGT, CFDT, FO), attached to the CSG and to the contributions, and certain left parties …
Except that this opposition is as sterile as it is stupid since unions penalize the French worker by exorbitant costs compared to other countries, and that VAT is not socially unfair if the rates are well differentiated between the products of primary necessities and daily life and the luxury products that we can do well!
François Bayrou is pragmatic: he does not wish to impose the measure himself, but rather to submit it to the opinion of the social partners – unions and employers’ organizations – which will decide together if they adopt such a reform. The idea is to initiate a social dialogue on a delicate subject, while keeping in mind the displayed objective: to reward work more and lighten the cost of labor to revive employment.
It is already too late, but everything is not lost.
Prepare!
Charles Sannat
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