In recent months, the government has mastered the art of correction. At the beginning of March, it revised its growth forecast for 2024 downwards, from 1.4% to 1%. A scenario still very far from the rate of 0.6% expected by the OECD and the European Commission. Economists continue to display their skepticism. On Wednesday April 10, Bercy unveiled its financial stability program, which will soon be sent to Brussels, in which it reassesses its expectation of the public deficit to 5.1% of GDP this year, compared to 4.4% previously. As a result, the executive will have to find an additional 10 billion euros to close this gap. Like a sense of déjà vu? A month earlier, Bruno Le Maire had already had to present a plan for budget cuts of the same amount. Rebelote in 2025, where for the moment there is a question of 20 billion euros in savings to be scraped by the State, social security and local authorities. The project promises to be complex.
Among the first avenues studied for the end of the year, we mention the contribution of ministries to the tune of 5 billion euros, but also of local authorities – most of which have already completed their budget – in the hope to recover 2.5 billion euros. For 2025, will the government finally tackle brown niches, these tax advantages considered harmful to the environment? Last September, the Minister of the Economy declared that he wanted to initiate “a shift from brown taxation to green taxation”. Six months later, nothing has changed. Bercy will meet again at the start of the next school year. On the occasion of the 2024-2025 finance bill, the debate could return to the table. “Bruno Le Maire is the umpteenth Minister of the Economy to propose reducing brown tax loopholes. It’s a sea serpent. The OECD has been recommending it for decades. The difficulty is not specifically French”, underlines Matthieu Glachant, environmental economist.
Government renunciations
Construction, agriculture, transport… Several sectors benefit from these brown tax loopholes. In the construction industry, for example, companies are entitled to a reduced rate for non-road diesel used by construction machines and equipment. A rebate estimated at 1.2 billion euros in 2023. This same fuel benefits from a tax refund for farmers in order to run their tractors. Amount of the bill: 1.3 billion euros in 2023.
Except that with the 2023-2024 finance bill, this advantage was supposed to simply disappear. This was without taking into account the agricultural crisis, which led the government to reverse course, for farmers only. Furious at this differentiated treatment, construction professionals ended up obtaining that companies with fewer than 15 employees could benefit from a reimbursement of the tax increase. “The economic situation is never favorable for narrowing down niches. Economically it would be wise, but politically it is very complicated because these are sectors which have been very affected by the rise in energy prices”, points out Anne- Sophie Alsif, chief economist at BDO France. Concerning the transport of heavy goods vehicles, the tax advantage on diesel, the addition of which is estimated at 1.25 billion euros per year for public finances, was ultimately not eliminated. “The government fears the reaction of the sectors concerned: truckers who block the highways, taxi drivers the ring road,” explains Matthieu Glachant.
An undervalued amount
All the experts mischievously recall this phrase attributed to former LR MP Gilles Carrez: “In every doghouse, there is a dog that bites”. In total, the State estimates the windfall represented by these advantages contrary to environmental imperatives at 7 billion euros. This amount could turn out to be largely underestimated due to the State’s choice to qualify this or that niche as “brown”. “It is completely normal that there is controversy because the concept is not completely clear,” recognizes Matthieu Glachant.
When a brown tax loophole is eliminated, however, savings for public finances are not automatic. “When you want to extinguish one, you are obliged to provide compensation, in the short term, to the sector which benefited from it. This is not how we are going to complete the 2025 budget,” laments Damien Demailly, director deputy general of the Institute of Economics for Climate. He nevertheless notes a progression of the problem in the public debate, despite the little progress: “We must continue to put the subject on the table. When the economic situation is better oriented and the sectors concerned are ready to absorb the increases taxes, that’s when we will have to act.”
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