France’s Finance Bill: A Comedy of Numbers
Ah, the French government, where the only thing more elusive than a clear budget plan is a mega-doughnut shop that actually sells mega-doughnuts. The latest installment of governmental shenanigans involves their ambitious goal to restore public accounts, which they’ve decided will take a whopping 60 billion euros. But hang on to your berets, because the proposed percentages for how this magical balancing act will happen are a real head-scratcher!
The Grand Strategy: Spending Cuts vs. Tax Increases
The Minister of Economy and Finance, Antoine Armand, seems quite chipper, declaring that “two thirds of this effort will come from savings made on expenditure and a third from targeted tax increases.” Sounds good, right? But wait, there’s more to the story – when a finance minister sounds this cheerful about spending cuts, you know something’s fishy. As if plucking euros from a magical tax forest were an everyday stroll!
Just imagine: Armand was quite adamant about scrutinizing every penny in parliamentary discussions, with a personal vow to make sure “one euro of taxation” gets replaced by “one euro of savings.” I mean, who knew politicians could lift weights? The only “weight lifting” most of them do is lifting their hands to vote themselves more holidays!
A Magical Split… Or Just Magic Tricks?
Now, if you’re keeping score, Laurent Saint-Martin suggests an even more thrilling proclamation: “two euros of savings for each euro of revenue!” Voilà, a two-thirds-one-third split, or is it a 50-50? The truth is as clear as a French wine glass—efforts to reconcile these figures have led us down a rabbit hole of confusion! The High Council of Public Finances (HCFP) is rolling its eyes and suggesting it’s more like 70% taxation and 30% spending cuts. Talk about a difference in perspectives; even philosophers would struggle to decipher this budgetary riddle!
Pierre Moscovici, the president of the HCFP, boldly stated that with their methods, the split flattens out to “more like 50-50.” So what is it—are we cutting spending or just raising everyone’s eyebrows? The only thing that seems certain is that numbers in politics are like the soufflés in a Parisian kitchen: prone to deflation!
The Spending Cuts: A Tax Rise in Sheep’s Clothing?
Scooby-Doo would have a field day with this! The government claims a 5 billion euro reduction in employer contributions counts as a saving. Wait a minute! That’s not a saving at all. That’s simply a sneaky tax tactic, wrapped up in a bow of semantics. François Ecalle, a former high-ranking official, might just drop the mic when he says: “it’s an increase in compulsory levies!”
And if you thought things couldn’t get any crazier, think again! As if by magic, both Moscovici and Ecalle agree on a total of 30 billion euros in tax revenue additional to the 20 billion put forward by the government. It’s like a comedy sketch gone wrong: everyone’s laughing, and no one’s quite sure why!
Fiscal Shock and Awe
In the grand finale, prepare yourself, because Ecalle drapes the term “fiscal shock” over the situation like an ill-fitting tuxedo. And what does that mean? Well, it sounds overly dramatic yet fitting for a government stressing out over a budget, hoping it can pull together something that resembles financial stability.
“In two years, we will have to replace the increase in corporate tax with something else or renew it,” Ecalle reveals, leaving us all wondering if anyone in the government is aware of the phrase “sustainable finance.” No tension here at all; just good old French fiscal fun, with an audience cringing in anticipation of what comes next!
In Conclusion
As we close this chapter in the riveting saga of French finance, remember this: when finances become a game of “how can we confuse everyone the most?”, it’s a sign of true political artistry! Bravo! If you need a recipe for fiscal fun—or confusion—look no further than the French government. After all, who doesn’t love a good laugh when it’s about balancing the books? Until next time, keep your wallet close, your laughter loud, and your French pastries heated!
The government has set the effort to restore public accounts at 60 billion euros as part of the 2025 finance bill, affirming that two thirds of this effort will come from savings made on expenditure and a third from a targeted tax increase. But the reality of this distribution to reduce the public deficit is debated. Explanations.
“An effort which will overwhelmingly focus on reducing spending more than on compulsory deductions“. This is how the Minister of Economy and Finance, Antoine Armanddefined during his hearing by the finance committee of the National Assembly, this Friday, October 11, the state accounts recovery strategy that the government wants to implement as part of the project budget pour 2025.
“Even if the tax tool is necessary in the short term (…) We keep our doctrine by maintaining a policy of supply and firm and lasting support for the activity“, he also assuredbefore committing”personally“to examine and, if necessary, to retain each documented proposal which, in the parliamentary discussion, will make it possible to “replace one euro of taxation with one euro of savings”.
The day before, during the press conference to present the finance bill (PLF), the Minister responsible for the Budget and Public Accounts, Laurent Saint-Martinhad mentioned “two euros of savings for each euro of revenue“, for a total of 40 billion euros reduction in public spending et 20 billion euros in leviesmainly borne by the wealthiest taxpayers and large companies which make significant profits.
A two-thirds-one-third split, the opposite or… 50-50?
A ratio of two thirds-one third displayed by the executive and contradicted by the High Council of Public Finances (HCFP). Heard in the Assembly, Thursday October 10, at the very time when the PLF was presented to the Council of Ministers, the president of the High Council, Pierre Moscoviciestimated the share of taxation at 70%, compared to 30% for the reduction in spending. An inversion which can, in part, be explained by different calculation methods: the HCFP retains a structural methodwhile the government has established its analysis in relation totrend development expenditure, or as if no braking measures were implemented. By retaining this second method of calculation, “we arrive more at 50-50“, finally indicated Pierre Moscovici, thus evoking “30 billion debits” out of the 60 billion planned effort.
Consulted by LCP, the former senior official who worked at the Ministry of Finance and the Court of Auditors, François Ecalle, considers that the government’s choice of thinking in terms of trend growth, is in theory the best method. “We consider that we make savings on expenditure from the moment when the growth of expenditure is lower than the potential growth of GDP, which is favored at the European level.“, he explains.
Reduction in aid or increase in levies?
That said, beyond the calculation methodthe president of Fipeco believes that a first bias in the distribution of the effort praised by the government lies in the fact that Bercy counts 5 billion reductions in reductions in employer contributions among the savings measures, although it is indeed the levier fiscal which is activated here. A way according to the former senior official to opportunistically use the argument of the left of the hemicycle in particular, for whom these reductions constitute “aides” to businesses. For François Ecalle, there is no doubt in any case, this is indeed an increase in a compulsory levy.
And in the end, like Pierre Moscovici who estimates the distribution “more like 50-50“François Ecalle also arrives at a total of 30 billion in tax revenueadding to the 20 billion assumed by the government the evolution affecting companies’ social contributions and that affecting the tax on electricity consumption.
“It’s a fiscal shock that’s still a bit harsh.“, estimates this public finance specialist who also doubts nature”temporary“of most of the levies contained in the budget.”In two years, we will have to replace the increase in corporate tax with something else, or otherwise renew it. I tend to think that it will be renewed“.
