The Minister of Economy and Finance Michel Sapin announced today a cut in taxes for the middle class. Since 2014, the government tries to reduce the tax burden. But the five-year term has been marked by a real increase.
“Since 2014, the government decided to go to the French part of the efforts that had been requested them to face the difficult situation encountered in 2012, when the deficit left by the previous majority was 5% of GDP … “
In presenting the tax act of the Government, this Friday, 9th September in the morning, the Minister of Economy and Finance, Michel Sapin wanted to remind that for two years, the taxes of a certain category of taxpayers had fallen.
Michel Sapin is probably right to state this, as this is not the impression that prevails among the majority of the French.
“Tax Ras-le-bol”
While Michel Sapin announced a new drop of 1 billion euros, the business daily Les Echos , published a survey on the famous “tax ras-le-bol” (1). Uplifting.
64% say that their taxes have increased since the arrival of Francois Hollande as president. Only 27% felt that they were stable. And 85% indicate that a further decline would be totally justified.
This sense of “tax ras-le-bol” is rooted in the policy from the beginning of five years, under the responsibility of Jean-Marc Ayrault, then Prime Minister.
A report by the French Economic Observatory (OFCE) released earlier this week said that “the mandate of François Hollande has been placed under the sign of the recovery of public accounts, including a fiscal shock of magnitude from the beginning mandate “ .
Belt tightening
To reduce the public deficit to more reasonable proportions, while the former head of state Nicolas Sarkozy had squandered, Hollande and his team chose to tighten their belts to the French.
The OFCE estimates that “the measures took effect in 2012 and 2013, some voted by the previous majority, are estimated at 52 billion” (15.5 billion decided under the Sarkozy era). And to specify that the adjustment was distributed among companies (+ 16 billion) and households (+ 32 billion).
The OFCE indicates that “the contribution of households mainly through higher income taxes (PIT and CSG), Heritage (ISF) and by the increase in social security contributions, especially at the time of the pension reform” . Not to mention other measures that affect the family quotient.
It loosens a bit
In 2014, a shift: aware that the tax is too much, Manuel Valls, the new Prime Minister, decided to loosen the grip. These are the first companies that will benefit. The government wants to restore their competitiveness and margins. The effects of CICE (Tax credit for competitiveness and employment, set up in 2013) and the liability of the Covenant (2014) begin to be felt.
For households, this is not quite the same … The OFCE notes that their tax “continued to grow”. 15 billion in 2014, including the increase in VAT rates.
In the end, the OFCE indicates that new tax burden on the five-year measures “represent 27 billion increases in the overall tax burden but distributed very differently: more than 20 billion of cuts for businesses against 35 billion increases for households “ . Not to mention“13 billion increase that could be split between households and businesses” .
(1) Survey conducted by the Institute for Elabe Les Echos, Radio Classique and the Institut Montaigne.
