The preparation of the 2025 budget takes place in a particularly difficult context: the need to restore public finances, the risk of worsening ecological debt and the urgent need to strengthen social cohesion in the country.
This means that new solutions must be found to continue the country's transformation, while taking into account the particularly tight budgetary constraints.
We are convinced that a virtuous circle must be created in which companies are encouraged to invest in the ecological and social transition. This will avoid budgetary, environmental and social costs for the community, while accelerating the transformations that will determine companies' future competitiveness. Modulating public aid and taxation according to companies' contribution to these common objectives would appear to be an effective way of achieving them.
The Impact France movement is therefore calling for the budget debate to enable the adoption of more systemic mechanisms to promote business transformation.
Make all public aid to companies or the granting of benefits conditional on compliance with legal obligations in terms of social and environmental responsibility
Why?
- Promoting ecological and social transition. By making public aid conditional on compliance with legal obligations (publication of the BEGES, professional equality, employment of disabled people, etc.), the French government is encouraging companies to comply with current regulations and adopt the responsible practices needed to align their business models with the objectives of the ecological and social transition in the short, medium and long term.
- Ensuring efficient use of public resources. Public subsidies account for a significant proportion of government expenditure. By making such aid conditional on compliance with environmental and social obligations, the State ensures that these resources are invested in companies that actively contribute to sustainability and social cohesion, while avoiding financing players that could exacerbate environmental and social imbalances.
How?
- Make the granting of public aid conditional on the publication of environmental and social indicators. For companies with over 500 employees, this includes the obligation to publish a greenhouse gas emissions balance sheet (BEGES) and define a reduction trajectory. Companies must also comply with the publication of other extra-financial indicators, such as the professional equality index or the employment rate of disabled people.
- Introduce systematic checks before granting aid. Before any public aid or tax breaks are granted, an a priori check would be carried out to ensure that companies are complying with their legal obligations in terms of social and environmental responsibility. This could also include regular monitoring to ensure that these obligations are respected over time.
- Modulate taxation according to corporate compliance. In addition to direct aid, taxation could be adjusted according to compliance with social and environmental obligations. Impact France thus advocates a surcharge on corporate income tax for companies that derogate from these legal obligations.
Using tax tools to encourage better value sharing
Modulate corporate income tax (CIT) according to the allocation of company profits
Why?
- Responding to the need for tax justice. At a time when the French Prime Minister is calling for " greater tax justice ", the reopening of the discussion on the level of the corporate tax rate is an opportunity to broaden the debate to the purpose of the tax: modulating the corporate tax according to the allocation of profits would make the tax system fairer, by penalizing practices of excessive distribution to shareholders and favoring internal investment and redistribution to employees.
- Curbing the rise in inequality. CAC 40 companies have considerably increased their payouts to shareholders, while salaries are rising at a much slower pace. This modulation aims to rebalance the distribution of the value created, by supporting a more inclusive model, where employees and investment are prioritized over shareholders.
How?
- We propose to modulate corporate income tax (CIT) according to the allocation of profits. In concrete terms, this would involve raising the rate of corporation tax for profits distributed to shareholders, with a higher rate than the normal rate for the portion of profits redistributed in the form of dividends or share buy-backs.
- At the same time, we propose to reduce the corporate income tax rate for profits reinvested in the company or redistributed to employees , in order to encourage productive investment and improve wage conditions.
Make taxation of share buybacks a tool for orienting the company towards the long term
Why?
- Rebalance the sharing of value. Share buybacks, which have exploded in recent years (rising from 8% to 45% of distributions in the CAC 40 between 2017 and 2023), concentrate profits in favor of shareholders. Taxation would enable resources to be redirected towards more equitable investments, notably for employees and the real economy.
- Combating a short-termist view of business. Share buybacks encourage management focused on immediate financial results, often to the detriment of productive investment and sustainability. Taxing these practices would encourage a more long-term strategy, strengthening the competitiveness of our economy and our companies.
- Draw inspiration from international best practice. Countries such as the United States and the Netherlands have already introduced such taxation, demonstrating that this mechanism can effectively steer companies towards more balanced and responsible practices. France has the opportunity to follow these examples to improve its competitiveness.
How?
- Apply progressive taxation to share buybacks. Introduce a specific tax rate, increasing with the volume of buybacks, to discourage their massive use and encourage companies to invest more in long-term projects. Impact France advocates using the debate on the Finance Act for 2025 as a framework for introducing this new taxation, also strengthening the taxation of "superprofits", in order to make it a genuine lever for rebalancing the sharing of value.
Redirecting innovation towards the country's major challenges
Making the research tax credit (CIR) a tool in the public interest
Why?
- Reduce inequalities between large companies and SMEs. Currently, 36% of CIR receivables benefit just 1% of companies, mainly large ones. However, the research tax credit (CIR) has a greater knock-on effect for SMEs. A reform would provide better support for small and medium-sized businesses, which are more innovative and create more jobs.
- Encouraging ecological innovation. The CIR does not sufficiently encourage companies to invest in green research, a crucial issue for future competitiveness and the ecological transition. Greening the CIR would make it possible to support research projects that meet environmental challenges while stimulating sustainable innovation.
- Make the system fairer and more efficient. Lowering the rate to 5% for R&D expenditure in excess of €100 million would improve the effectiveness of the CIR, by redirecting credits to companies where the leverage effect is stronger. This would make the tool fairer and better aligned with current needs, without harming economic attractiveness.
How ?
- Lower the CIR rate, currently at 5%, above 100 million euros of expenditure. This measure would limit the tax advantage for very large companies, while increasing the impact of the CIR for SMEs/ETIs, which derive greater benefit from this support. This would enable the tax credit to be refocused on companies with a greater need for support.
- Introduce a 30% bonus for green R&D expenditure. We are proposing to introduce a bonus CIR rate for investments dedicated to green research, in order to boost innovation in green technologies. This bonus would encourage companies to integrate environmental issues into their research projects.
Foster the emergence of French transition champions by creating a "Jeune Entreprise Innovante à Impact" (JEII) status.
Why?
- Recognizing ecological and social innovation. The Impact France movement advocates the recognition of forms of innovation other than disruptive, hyper-profitable ones. Innovative activities with an ecological and social impact carried out by SSE and ESUS-certified start-ups must be supported: this is a matter of sound management of public finances, since their positive impact helps to avoid major ecological and social costs for the public authorities.
- Aligning the Young Innovative Company (JEI) scheme with today's challenges. At present, many companies developing ecological and social innovations lack the support they need to grow and develop. By creating the status of JEII, these companies could benefit from tax breaks and a support framework adapted to their specificities, thus favoring their positive impact on society and the environment.
How ?
- Establish a new Young Innovative Company category within the JEI scheme for companies less than 8 years old, incorporating specific criteria linked to the social and environmental impact of their activities, based on the existing legislative framework for the social economy (ESS) and the "Entreprise Solidaire d'Utilité Sociale" (ESUS) approval.
- Offer targeted tax incentives. Introduce tax breaks and exemptions from employer contributions similar to those offered by the JEI status, but adapted to the characteristics of JEII. This would include specific reductions for companies investing in projects with a social or ecological impact, thus maximizing their innovation potential.
To support the development of JEII, we propose to create a special department within the French Tech mission dedicated to JEII, which would provide strategic and operational support. This could include access to specific funding, incubation programs, and networks of experts to help these companies maximize their impact and structure themselves effectively in a competitive environment.
Reducing brown niches in the mobility sector
Reducing the company car depreciation allowance for combustion-powered vehicles
Why?
- Reducing companies' carbon footprint. Company vehicles account for a significant proportion of CO2 emissions, not least because of their intensive use. Limiting the depreciation allowance for combustion-powered vehicles encourages companies to renew their fleets with less polluting vehicles, thereby contributing to the overall reduction in greenhouse gas emissions.
- Harmonize tax incentives with climate objectives. While the transition to sustainable mobility is a priority for France, it is inconsistent to continue to indirectly subsidize the use of polluting vehicles through tax deductions. Reducing this deduction for internal combustion vehicles would bring tax policies into line with national and European climate commitments.
- Encourage innovation and the market for electric vehicles. By making combustion-powered vehicles less attractive to businesses, this measure would encourage faster adoption of electric or ultra-low-emission vehicles. This would stimulate innovation in the automotive sector and support the development of the infrastructure needed for electric mobility, while meeting the growing demand from businesses seeking to reduce their environmental impact.
How ?
- Eliminate the deduction for the most polluting vehicles. Introduce an immediate abolition of the tax deduction for company vehicles whose emissions exceed 141g CO2/km, i.e. those classified between categories D and G on the energy scale. This would reduce tax benefits for companies using polluting vehicles and encourage a switch to greener models.
- Establish, in a second phase, a gradual trajectory for the elimination of this depreciation allowance for all combustion-powered vehicles by 2027, with the exception of very low-emission vehicles. This timetable would enable companies to anticipate and plan the renewal of their fleets by moving towards more environmentally-friendly vehicles, while avoiding too abrupt a changeover.
- At the same time, extend beyond 2024 the scheme reducing social security contributions by half for employees benefiting from an electric company vehicle. This measure would prevent a switch back to combustion-powered vehicles and make electric vehicles more attractive to employers and employees alike.
Increase VAT rate on domestic flights from 10% to 20%.
Why ?
- Bringing the tax advantages enjoyed by domestic aviation into line with its environmental impact. Domestic air transport emits at least 10 times more greenhouse gases than rail transport, yet air tickets benefit from a reduced VAT rate. Increasing this VAT would reflect the true environmental cost of aviation, encouraging more responsible use.
- Generate additional tax revenue. This increase could bring in around €130 million extra per year for the State, while having a limited impact on the market, given the rise in ticket prices since 2017. These new revenues could finance initiatives linked to the ecological transition or improve sustainable transport infrastructures.
How?
- Apply a VAT increase from 10% to 20% on air tickets for domestic flights. This measure would reinforce the price signal associated with air transport, while encouraging a smooth transition to more sustainable modes of transport.
