2023-07-07 10:56:10
A fitting note. While the government is working on the next finance bill (PLF 2024) to redress the public accounts, the Court of Auditors has just post a note to encourage the executive to consider the cost of tax loopholes. Because the tax advantages and tax reductions – which benefit individuals and businesses – weigh more and more heavily in the accounts of the State.
In the space of 10 years, the cost of these tax expenditures has increased by 16% to reach 94.2 billion euros in 2022, or 3.6% of GDP. And even if they generate revenue for the State (income tax and corporation tax represent 45% of the revenue generated), “the high level of these tax expenditures reduces tax yield”, notes the Court of Audit.
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In addition, the Court of Auditors highlights the fact that the cost of tax loopholes is very concentrated: the 15 most expensive schemes cut public revenue by 53 billion euros in 2022. Conversely, more than half tax expenditures have an individual cost of less than 50 million, for a total cost of 2.5 billion euros in 2022.
Faced with this observation, the Court regrets that “for ten years, no supervision mechanism has made it possible to improve their management on a lasting basis and has moderated their increase, both in number and in amount”. “The devices provided for by the successive public finance programming laws in order to contain growth and develop their evaluation have proven to be ineffective or unapplied” due to a lack of “political will”, it is noted.
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Four proposals on the table
In its report of regarding twenty pages, the Court of Auditors has thus established four proposals to better regulate the 465 tax advantages and tax reductions existing. To limit the cost that these tax loopholes generate for the State, it recommends that they be considered “as ordinary expenditure, subject to similar capping rules, limited in time and subject to the same performance requirements”.
Furthermore, to ensure the effectiveness of these tax benefits, the Court proposes to strengthen the role of tax conferences, with more rigorous management. Another proposal: limit the duration of any new tax shelter to four years. Finally, “it would be appropriate to program the exhaustive evaluation of all tax expenditures by 2027, placing this work under the responsibility of an ad hoc committee”, it is further noted.
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Certain sectors concerned by tax advantages are also particularly singled out: that of housing. With 65 tax loopholes representing 13.9 billion euros, the Sages want to tackle this sector as a priority. A situation that has not escaped the government since recently, Elisabeth Borne announced the end of the Pinel device in December 2024, deemed ineffective.
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