During a recent meeting of the French cabinet, attended by Germany’s Finance Minister Wolfgang Schäuble, French President Nicolas Sarkozy put forward the idea of convergence of the French and German tax systems.

The French President proposed that the Court of Auditors in France and its German equivalent draw up a joint inventory comparing the two countries’ tax and budget systems, with the aim of enabling the governments to take decisions to move towards a “necessary fiscal convergence”, both in the area of company taxation and individual taxation.

Underlining the fact that the convergence of the two tax systems was an “essential element” of economic integration and the deepening of the European internal market, Sarkozy noted that France and Germany alone represent 49% of euro zone gross domestic product (GDP), and that their growth is therefore an essential element for the dynamism of Europe.

Alluding to the fact that the level of the tax burden is similar in France and Germany, with respectively 42.8% and 39.5% of GDP in 2008, President Sarkozy acknowledged that these global figures represent vastly different realities. The figures also hide an even greater discrepancy in the area of government spending – 55.6% of GDP in France in 2009 compared to 47.6% in Germany.