“I responded to the yellow vests by lowering taxes and did not give in to making public spending more flexible. We have made a reduction of 50,000 million euros in taxes, half for households and the other half for companies, compared to the previous five-year term years. ”, explained Emmanuel Macron on Thursday.
In his long interview in PointThe Head of State was pleased to have significantly reduced taxes during his previous five-year term. A discussion taken up the following day by Bruno Le Maire during a visit to Haute-Savoie.
However, when we measure the weight of all mandatory taxes in relation to GDP, this is not what we see. According to INSEE, the sum of taxes, rights and social contributions collected in 2022 by the administrations represented the equivalent of 45.4% of GDP, its highest level ever measured.
This rate, which had in fact fallen between 2017 and 2019, from 45.1% to 43.8% of GDP, has since started to rise again. In 2021 it was already 44.3% before exceeding 45% last year.
However, when we question the DGFiP, Bercy’s tax administration, they assure us that the amount saved in taxes by households over the last five years amounts to exactly 52.4 billion euros.
So, less tax or more tax? It would seem that paradoxically it is… both! And to understand it, you have to go back to the performance of the executive during the last six years.
In fact, there have been many cuts and rate cuts since Emmanuel Macron’s arrival at the Elysée. Regarding the first income tax, there was a reduction in the second tax bracket, which fell in 2020 from 14 to 11%. In addition, the scale of tranches has continued to increase (+5.4% in 2022) to take inflation into account. Specifically, in 2017, they charged you 14% of your annual income from 9,808 euros, while today you pay 11% on a tranche that starts at 10,777 euros. For an employee who earns 1,800 euros net per month, the gain in purchasing power amounts to about 400 euros per year.
Less taxes increase taxes
The pressure has objectively decreased. And yet, if we continue to take data from the DGFiP, we see that, on average, the French paid more income tax in 2022. Revenues reached 110 billion euros for 18 million taxable households, compared to 100,000 million of the previous year for 17.6 million households. This represents an average tax of 6,100 euros per tax household applied in 2022 compared to 5,660 euros in 2021.
Same paradox with the corporate tax (IS) that companies pay based on their profits. The IS rate has fallen dramatically over the last five years, falling for large companies from 33.3% to 25% in 2022, with a still reduced rate of 15% for small companies. The tax brackets have also increased, since it was necessary to make less than 38,120 euros of profit in 2016 to benefit from the reduced rate compared to 42,500 in 2022. But also in this case, this tax has generated much more revenue since the rate has been lowered . 86,800 million euros of gross income in 2022, compared to 74,500 million in 2021. Companies have paid an average of 28,000 euros in IS compared to 25,700 euros the previous year.
Added to these reductions is the suppression of the habitual residence tax (18,500 million euros less in taxes for households in a full year), the audiovisual tax (3,200 million euros less), the transformation of the ISF into a real estate tax (revenues reduced from 5 billion euros in 2017 to 2.35 billion in 2022), the implementation of the single flat rate (PFU) known as “single tax” at 30% instead of the previous progressive tax rate that could reach 45%.
Therefore, the government has lowered tax rates and abolished a number of levies since 2017. It has also transformed CICE into permanent reductions in employer contributions and financially encourages employers to pay bonuses and overtime exempt from taxes and charges .
However, despite the numerous blows in the fiscal sphere, compulsory taxes have increased considerably: 1,197 billion euros last year against 1,009.6 billion euros in 2017, or almost 200 billion euros more in five years.
Hidden tax increases?
Are there hidden taxes that the tax authorities have quietly increased to compensate for the reductions granted? Consider in particular local taxes, such as property taxes and other onerous title transfer fees (the DMTO often erroneously calls “notary fees”) that constitute the main resources of municipalities, departments and regions.
Les fiscal prescriptions collectivités ont certain omenté ces dernières années (et the rest. But important as it is, this increase represents only 14% of the mandatory tax increase over five years.
Therefore, the growth of mandatory taxes seems to have only one explanatory factor: the reactivation of economic activity. If the saying goes that too many taxes kill taxes, less taxes in this case seems to increase taxes.
According to INSEE’s annual employment surveys, the number of employed people went from 27.6 million people at the beginning of 2017 to 30.3 million at the end of 2022. However, these 2.7 million more people who work generate contributions and pay taxes.
If we take income tax, the DGFiP indicates that 18 million people paid taxes in 2022, compared to only 16.3 million in 2017. In five years, the tax base has expanded considerably and the income of liable taxpayers has increased. increased. Hence this strong growth in tax revenue.
Same reasoning for corporation tax. In a buoyant business environment and high inflation, earnings rose sharply last year. Therefore, corporate tax collection has increased despite the reduction in the tax rate.
Even so, this base increase should logically be accompanied by GDP growth and therefore limit the mandatory tax rate.
Two explanations can be proposed. One cyclical, the other more structural. On the one hand, inflation that artificially inflates prices, benefits, wages and, therefore, finally tax revenue without producing more. The other is more problematic and has to do with productivity.
Despite a significant increase in the number of people employed in the last six years (and therefore taxpayers and taxpayers), GDP growth remains relatively weak in France. As a result, the volume of production increases less rapidly than the activity and therefore the samples. Hence this increase in the rate of the mandatory fee compared to GDP.
Source: BFM TV
