The General Social Contribution[edit]
The Generalized Social Contribution (CSG) is a tax to fund health insurance family benefits and the Retirement Solidarity Fund (FSV). Created by the 1990 Finance Act, it is payable by all residents in France, except (for earned & retirement income) those who are not members of any French compulsory medical insurance scheme.[1][2] It is levied at source on most income, excluding benefits and family. Its rate, modified in 2005, amounts to 7.5% for earned income (salaries, bonuses), heritage and placement (annuities, capital gains) and 8.2% for unearned income and investment (annuities, capital gains). There are reduced rates for income from benefits (pensions, unemployment benefits).
The CSG aims to diversify the financing of social protection, based mainly on social contributions. The traditional system had become questionable because social contributions used to be a burden for employers, for contributions are levied on earnings, i.e. they are part of the labor costs. In addition, only incomes from work used to contribute.
The CSG enabled to ease the burden of social security contributions on wages, to promote a way of funding consistent with the widespread use of Social Security benefits, and to force all household incomes to contribute (e.g. income from work but also property), contrary to social contributions. His return is important (75 billion euros) and represents almost two-thirds of taxes allocated to social protection (65%). The CSG is currently the second most important tax in France, after the VAT.