The reduction in production taxes: targeting and évaluation

Bach, Laurent; Chouc, Paul-Emmanuel; Fize, Etienne; Guillouzouic, Arthur; Dutronc-Postel, Paul; Malgouyres, Clément

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The reduction in production taxes: targeting and évaluation

Laurent Bach, Paul-Emmanuel Chouc, Etienne Fize, Arthur Guillouzouic, Paul Dutronc-Postel, Clément Malgouyres

October 2025

This report presents the findings of the évaluation of the €10 billion per year reduction in production taxes, introduced in the 2021 and 2022 draft finance bills as part of the recovery plan.

Reference IPP Report No. 60

Quote this publication

Bach, Laurent, Chouc, Paul-Emmanuel, Fize, Étienne, Guillouzouic, Arthur, Malgouyres, Clément, Dutronc-Postel, Paul (2025). ‘The reduction in production taxes: targeting and evaluation’, IPP Reports, No. 60. The Institut des politiques publiques (IPP).

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Presentation

This research project was launched in 2024, building on the IPP’s previous work on capital tax reforms.

Its aim is to carry out the evaluation of the reform to reduce production taxes by €10 billion per year, introduced in the 2021 and 2022 Finance Bills as part of the recovery plan. The evaluation carried out by the IPP research team focuses on the corporate value-added levy (CVAE) – a halving of the rate – and the business property levy (CFE) for industrial premises.

The first part of the report describes which firms have benefited most from these tax cuts. The second part of the report seeks to determine whether these reforms have succeeded in increasing the quantity and quality of investment made by these firms, in line with the legislature’s intention.

Key Results

Key findings on the profile of beneficiary firms

Larger and more capital-intensive firms benefit the most.
It is also notable that firms in the industrial sector benefit more.
Firms that are more active in exports – even within the manufacturing sector – benefit more from the reform.
Prior to the 2021 reform, the CET placed a relatively heavier burden on firms with low profitability and less generous dividend policies, a sign of potential financial constraints.
This targeting contrasts sharply, for example, with that of corporation tax, which is positively correlated with profitability and the generosity of dividend policy.

Key findings on the economic impact of the reduction in the CFE

The results show a significant negative effect of the reform on the amount of CFE paid by firms. The data and methodology used therefore allow the first-order fiscal effect of the reform to be clearly isolated. With regard to variables relating to firms’ economic activity, such as sales, investment and export behaviour, the results are mixed and do not provide evidence of significant effects, although some results suggest a slightly positive effect on turnover.