Every week brings its own slippage. According to the latest estimates from Bercy, the public deficit will ultimately be close to 6% of GDP this year, compared to 4.4% forecast in the draft finance bill presented a year ago at the same time, much more than what the Treasury experts feared in the middle of summer. At the very least, it would be necessary to find between 30 and 40 billion euros next year to hope to bring the deficit back to 5% of GDP in 2025.
Between the political red lines imposed by the various factions of the National Assembly, Michel Barnier slaloms. In terms of taxes, an exceptional surtax on the profits of large groups – the Medef no longer opposes it head-on but imposes its conditions – and a freeze on the income tax scale for the highest brackets, are said to be in the pipeline. A few cuts to tax loopholes, such as that of the Dutreil Pact, could be added. All for around ten billion euros. Yet another botched job.
The two evils from which France suffers
France would, however, deserve a complete overhaul of its tax system. The country suffers from two seemingly contradictory problems: a record tax rate and a crumbling tax pie. Over the decades, exemptions, reductions, reduced rates, tax credits, and tax loopholes of all kinds have pierced the tax base. Some of these measures are justified. Others can only be explained by the growling of dogs sleeping in kennels. The result? Only 1 in 2 tax households pays income tax. Since the abolition of the housing tax, local taxes only weigh on homeowners, regardless of their income. A report published in 2023 by Jean-René Cazeneuve, Budget Rapporteur at the National Assembly, revealed that the effective corporate tax rate was 17.1% for large companies, compared to 21.3% for mid-sized companies and 19.9% for SMEs.
Bercy experts estimate the amount of “tax expenditures” at nearly 90 billion euros per year, i.e. the revenue missing from the accounts due to this myriad of tax breaks and loopholes. France, still haunted by the Revolution, could however remember Article 13 of the Declaration of the Rights of Man of 1789: “For the maintenance of the public force, and for administrative expenses, a common contribution is indispensable: it must be equally distributed between all citizens, according to their means.” When will there be a tax revolution with lower, more progressive tax rates and a broader tax base? A roadmap for after 2027.