Expensive for public finances, what if the research tax credit was cut?

The research tax credit is in the hot seat. It must be said that this tax credit, which allows 30% of research and development investments to be deducted from corporate tax, is expensive. Very expensive. More than 7 billion euros last year. It is the largest companies that capture the majority of the funds, which sometimes leads some to say that there is a huge windfall effect. Renowned economists from all sides such as Philippe Aghion, Nicolas Chanut and Xavier Jaravel argued in a 2022 report to this effect. While defending the system, the new Minister of the Economy did not rule out, this weekend, in the columns of JDDto take a look at it.

If France has become attractive again in recent years, it is because our policy of supporting the installation of factories and research centers has increased significantly. And above all, it has been sustainable. The CIR, the most interesting version of which dates back to 2008, is largely part of this. It has helped improve the image of our country and has contributed to creating jobs. That is a fact, even if we can discuss the extent. So yes, it is interesting. However, since 2008, the situation has changed a lot. The cost of labor and corporate taxes have been revised downwards. Without being paradise, France is today in the average – admittedly high – but the average of OECD countries.

At a time when savings need to be found, it is not stupid to look in this direction. It could be capped, concentrated on small businesses or limited to green research projects. It would be a hard blow, certainly, for some businesses, but it could allow substantial savings to be made. Even the head of Medef seems to have resigned himself to it and said he was open to it this morning in the Parisian to discuss a corporate tax increase. The only thing left to do is not to break the dynamic of innovation. Because ultimately, the crux of the matter is to prepare our future. French genius… and not just for the creation of new taxes!

Find this column, and previous ones, on the France Inter website