2023-07-06 20:00:00
The government remains inflexible on the financing of the transition. The executive does not wish in any way to resort to debt or taxation to inject billions of euros into “green” investments. After the publication of the report by the economist Jean Pisani-Ferry and the finance inspector Selma Mahfouz, at the end of May, the Minister of Public Accounts Gabriel Attal explained on the antenna of France Info what “Going into debt to invest in the transition was useful for the country, the planet, the economy, tax revenues […]. But the priority is the deleveraging of our country”. During the first semester, the executive conducted a spending review in an attempt to find savings. The objective is to save between 10 and 12 billion euros per year.
Budget: the government’s explosive ways to cut public spending
In an attempt to restore public finances, the Court of Auditors recommends in a note unveiled this Thursday, July 6 to clean up tax loopholes. “The amount of tax expenditures [des réductions d’impôts, ndlr] increased by 16% in ten years in constant euros. The effectiveness of tax systems is not assessed”, regretted the president of the Court of Auditors Pierre Moscovici during a press briefing. While Bercy is carrying out the final arbitrations before the finalization of the finance bill (PLF2024) for 2024, the financial institution hopes to make its contribution to the budgetary edifice.
Budget 2023: 465 tax loopholes for a colossal amount of 94 billion euros
During their work, the magistrates identified 465 tax loopholes in the 2023 budget for a colossal amount of 94 billion euros, or around 3.6% of gross domestic product (GDP). In 2013, the value of tax shelters amounted to 73 billion euros. A very large majority (90%) of this total is concentrated on three taxes: value added tax (VAT), income tax and corporation tax. Despite the many promises to plan some of these devices, their number has continued to climb.
They also represent a substantial loss of government revenue at a time when France has pledged to reduce its deficit and debt by 2027. “Given their amount, tax expenditures are a major challenge for respecting the trajectory of public finances”, officials point out.
In Europe, France holds a “singular” place. The weight of tax credits in relation to GDP is three times higher than the average for the Old Continent (0.9% once morest 0.3%). Regularly, the tax credit for research (CIR) is the subject of fiery debates among economists. This tool is sometimes accused of facilitating the tax optimization of companies. But successive governments have often backtracked on attempts to reform this controversial niche.
Research tax credit: a maximum of 2,000 jobs created per year, the niche is struggling to convince
“Brown” tax loopholes in the executive’s sights
During the public finance meeting at the end of June, the Minister of the Economy Bruno Le Maire explained that he wanted to tackle the tax advantages enjoyed by building professionals, public works and farmers. On these explosive subjects, the executive has promised an implementation « progressive d’ici 2030 ».
Already, during Macron’s first five-year term, the government had already promised to review these tax expenditures. But he had come up once morest the revolt of the construction and public works sectors. Faced with fears, Bruno Le Maire promised “compensatory measures”.
Better target business aid to avoid “capture”
Among the other potential levers of savings discussed in the Court’s notes are aid to businesses. By adding the emergency measures to deal with Covid and the measures of the resilience plan put in place in the spring of 2021, the total cost is estimated at 94 billion euros. And it climbs to more than 260 billion euros taking into account state-guaranteed loans (PGE) and contribution deferrals. “These measures have proven to be effective, but a priori checks have been very limited. Some aid was granted without verification”declared Pierre Moscovici during the meeting with the journalists.
Faced with the risk of fraud, the court proposes “ to establish the temporary nature of emergency measures such as PGEs “. The courtyard ” recommends better targeting of aid to limit the risks of capture and scattering “. It is also necessary “more effective controls” concluded Pierre Moscovici. It remains to be seen whether the former finance minister under François Hollande will be heard by the government during the next crises.
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