In matters of public finances, as elsewhere, everything is in the narrative. The beautiful story constructed to dress up reality, to convey the painful, and to divert attention. In recent weeks, the debates sparked by the surge in property taxes are, once again, a perfect example. With the tax blow that hit homeowners in France on their return from vacation, the story of these local authorities caught by the throat financially, stuck between the abolition of housing tax and the violence of the energy shock, is gradually imposed. Poor municipal block, victim of a rapacious State! In a France where the “small” – the municipalities – are always right in the face of the big – the State -, the story spread like wildfire. The problem is that this narrative is based on three untruths.
The first: the municipalities were penalized by the elimination of the housing tax. Fake. The latter was in reality compensated to the nearest euro by the State. We can obviously wonder about the validity of the abolition of this local tax which deprives the communities of a tax lever and a form of budgetary autonomy. But in the mishmash of the abolition of the housing tax decided by Emmanuel Macron in 2017, the municipalities recovered the fruit of the property tax previously dedicated to the departments, which were granted a piece of VAT… However, the revenue from the property tax have been very dynamic over the last decade, more so than that of the housing tax. And when the account was not there, the State opened its checkbook.
Second untruth: the municipalities had a heavy hand on the property tax. Wrong again. Beware of the magnifying effect of the Parisian case! Nearly 85% of mayors have not increased their tax rates. And if the amount of tax that landlords must pay has actually increased – on average by just over 7% this year – it is because the rental bases have been mechanically indexed to inflation, and have been for chandeliers.
Good accounts for local authorities
Third illusion: local authorities are financially exhausted. Again, false. In the summer heat, a very detailed report published by the Court of Auditors on the situation of local public finances at the end of 2022, reveals their very good financial shape. In reality, their situation has never been so favorable, whatever the strata, regions, departments or municipalities. Three figures illustrate this. At the end of 2022, the balance of local authorities on their account with the Treasury – a kind of bank account – reached 60 billion euros. Never seen. Similarly, their net savings, excluding debt, rose to 26.3 billion euros, against 17.7 billion in 2016. As for debt, it only represented 4.3 years of savings, compared to 5.3 years 7 years ago. Obviously, these overall figures mask some difficult situations, including that of the capital, but they are far from the majority. The reality is that the financial situation of local authorities is better than that of the State, conclude the sleuths of the Court of Auditors.
Certainly, the year 2023 should be less favorable. In particular for the departments which will suffer the double shock of the drop in transfer duties – part of the famous notary fees – due to the downturn in the real estate market, and less dynamic VAT receipts with the drop in consumption. But by crying wolf, the risk is that we will no longer hear, in the event of a real hard blow, the complaints of our territorial millefeuille.