Social VAT: François Bayrou Reignites Debate, Urges Social Partners to Take Up the Issue

As France grapples with how to finance its social model, Prime Minister François Bayrou has reopened the long-standing debate over “social VAT.” Speaking on BFMTV and RMC on Tuesday, May 27, the Prime Minister called on social partners to “take ownership” of the issue in the coming weeks.

A Previously Tested, Then Abandoned Measure

The concept of “social VAT”—which aims to offset reductions in employer social contributions by increasing VAT—was briefly enacted in 2012 before being repealed by former president François Hollande. The measure is designed to make labor more cost-effective while maintaining funding for social programs.

“Work in France is not rewarded as it should be,” Bayrou asserted, adding that he is “willing to reconsider the entire structure of how our social model is financed.” He argued for a rebalancing between contributions based on labor and those based on consumption, especially in light of ongoing public deficits.

Strong Pushback from the Left

The proposal, indirectly referenced by President Emmanuel Macron during a TF1 interview in mid-May, has already sparked criticism from the left. Speaking on franceinfo, Manuel Bompard, national coordinator of La France insoumise, condemned the idea as “completely unacceptable.” He described VAT as “the most unfair tax,” noting that it disproportionately affects low-income households: “For the poorest 10%, 12% of their spending goes toward VAT, compared to just 5% for the wealthiest 10%.”

Shared Effort in Public Finance Reform

Alongside this proposal, Bayrou also announced that he would present a “multi-year plan” to restore public finances in early July. This plan, he warned, will “require effort from all French citizens.” The Prime Minister is aiming to lay the groundwork for a fiscal reset—one he hopes will be socially just while ensuring economic sustainability.