Saturday, 22 January, 2022

Tax increases fuse, Macron refuses

Sunday morning, in the JDD, appeared an interview with the Minister of Territorial Cohesion Jacqueline Gourault. She indicates that she is in favor of “everyone paying income tax.” Including the most modest, even one euro. It is true that this symbolic measure to “give back to everyone the meaning of the citizen act that is the tax”, is a plebiscite in the meetings and in the online contributions of the Great debate. LREM deputy Bénédicte Peyrol, head of the group at the Finance Committee, had already spoken in favor of this measure at the end of December. Alas, Sunday evening, end of non-reception coming from the Prime Minister: “The trail of a universal income tax is not being studied. “

This regular reframing is surprising in terms of form, if we consider that all the interviews of ministers are reread by Matignon before publication. But less surprising, on the merits, so much, on closer inspection, this measure would be politically explosive. Because while it is true that only 43% of French people pay income tax, over-concentrated on the middle classes, more than 80% of French people pay the CSG, which is in fact another income tax. The CSG hits income from the first euro earned (so even a half-time Smicard). Only social minimum benefit recipients (RSA, disabled allowance, minimum old age, etc.) and the unemployed and ultra-modest retirees receiving less 930 euros per month are exempt. By this yardstick, it would therefore be a “special poor” tax, which, in addition, risks costing the tax administration more than what it would bring back since, according to Bercy calculations, below 61 euros per year the cost of recovery becomes higher than the yield!

Message from the Elysee: no more tax increases

This sequence where the head of government opposes an express refusal to a tax suggestion launched out of the blue by one of the tenors of his majority has almost become a routine: not a week without parliamentarians or ministers outbid their imagination to review this or that tax (ie increase it). And not a week without Matignon and / or the Elysee being forced to urgently reframe with always the same message: no, no and no, no more question of increasing taxes for anyone.

At the same time, it is the executive which opened Pandora’s box, by including “Taxation and public expenditure” among the four themes of the Great National Debate … Difficult to do otherwise while it is an increase in tax – the carbon tax, which increases the price of fuels – which triggered the anger of the yellow vests and that, since then, tax claims have held the upper hand on roundabouts and in demonstrations. The concern is widely shared since, according to polls, nearly 60% of French people believe that this should be the priority topic of the debate.

Suddenly, the policies of the majority, parliamentarians and ministers, officially invited by Emmanuel Macron to participate in this national consultation, let go, to stick to the expectations of their voters, and also to try to take off this embarrassing label of “president of the rich »Attached to the head of state, since he dared to attack the ISF. Opposite, the government is groping, between the need to provide a response to the thirst for tax justice expressed by the yellow vests and the risk of further bludgeoning the upper middle class, much in demand in recent years and the first supporter of the President Macron. Result: a confused cacophony on this highly inflammable subject that is the tax …

An episodic soap opera

Review of Macronie’s tax proposals in recent months:

  1. Raise inheritance tax : Last September, when he was leading the La République en Marche movement, Christophe Castaner called for “a no-holds-barred reflection on an overhaul of inheritance taxation”. Obviously, for the Elysee, there is indeed a taboo since the president immediately let it be known that he “formally excludes any modification of inheritance rights under his presidency”. The subject resurfaced at the end of December with a note from the left-wing think-tank Terra Nova, but it was again immediately dismissed.
  2. Restore the ISF: December 4, on France 3 in a debate on yellow vests, the Secretary of State for equality between women and men Marlène Schiappa, cowardly: “We are going to assess the transformation of ISF into IFI and if the ‘evaluation shows that capital is not sufficiently injected into the French economy, I will propose to restore the ISF. “Ouch: chanted like a leitmotif by the yellow Giles, the request to hand over the very symbolic” tax on the ultra-rich “is the subject of firm opposition from the Head of State:” We must not lose consistency of what we have been doing for eighteen months. This implies not to unravel everything end by end ”. However, as LREM deputy Bruno Bonnell suggested in November, a capital tax reform assessment mission, including economists and parliamentarians, was set up to find out whether this money saved in taxes is indeed. invested in the productive economy. His report, scheduled for September, is eagerly awaited.
  3. Maintain the housing tax for the wealthiest 20%: already in the process of being abolished for 80% of the French, the government had been led (on injunction of the Constitutional Council) to promise its extinction also for the wealthiest 20% by 2021. But the Minister of the Economy Bruno Le Maire launched a test balloon to reverse this promise: “We can very well ask the French if it is legitimate to remove it for the richest 20%”, he suggested on January 6 on Europe 1 … before back pedaling and ensuring wanting the total abolition of the housing tax for all. His colleague, Minister of Public Accounts, Gérald Darmanin, immediately supported the proposal, as did the President of La République en Marche, Stanislas Guérini. The possibility ” is on the table “, even assured government spokesperson Benjamin Griveaux. Fifteen days later, the presidential correction arrived, during a debate with the mayors on January 25: “No one will pay it anymore. We will remove it in three parts, ”assured Emmanuel Macron. Close the ban.
  4. Create a new upper income tax bracket: The idea emerged in LREM group discussions at the Assembly in mid-January. Why not counter the abolition of the ISF by increasing the IR for the very rich, with a new bracket above the 45% which affects income beyond 156,000 euros per year? Emilie Cariou, vice-president of the Finance Committee at the Assembly, is in favor, as is Stanislas Guérini and LREM deputies like Guillaume Chiche and Roland Lescure. Gérald Darmanin put a stop on February 4, in an interview with Le Parisien: “45% of the French are taxable, and the wealthiest 10% already pay 70% of the total income tax” he reminded you .
  5. Tax capital gains for certain main residences: It was Emmanuel Macron himself who suggested that this was an interesting lead during a citizen debate in Bourg-de-Péage (Drôme) on January 24: “Your idea is very good” he said. replied to a speaker who suggested taxing capital gains on main residences. And to denounce the “unfair” capital gains in favor of owners who “did not work for that”, in cities which, like Bordeaux, saw their prices soar following the arrival of the TGV. The Head of State would therefore be “favorable” to the idea of ​​authorizing communities to tax real estate capital gains in tense areas. While specifying that it could not be a national tax policy. This exchange shook in real estate circles and, quickly, it was necessary to demine. The Minister of Housing, Julien Denormandie, a close friend of the president, indicated on RMC on February 13 that he was “not in favor” of this measure in the name of preserving the purchasing power of owners. Previously, Bruno Le Maire had tried to reassure on France 2: « This is a line of work, as long as we talk about main residences at a very high level. We are not going to tax the profits of French people who have made a capital gain on a property that they have bought 100,000 to 200,000 euros ”. Reflection is therefore on the table.
  6. Lower the ceiling for tax loopholes: The proposal came from this same interview with Gérald Darmanin at Parisian February 4. Targeting the 14 billion euros of shortfall due to niches in the personal income tax, he notes that “more than half of these 14 billion benefits the 9% of the richest French” and therefore wants “That we come back to it by reducing the overall ceiling of the niches or that we put them under conditions of means.” His idea is to recover 1 billion of these 7 billion. In the Council of Ministers on February 6, the Head of State had to re-specify his doctrine: “The debate yes, but the line is not to increase taxes and reduce the niches, it is to increase taxes”, he warned, annoyed. But the minister is not disarming. In the Assembly, on February 20, he returned to this thorny question, explaining that he did not intend to increase the tax but rather transfer it because he intended to reuse this billion to pay it to the most modest.
  7. Start the carbon tax hike again: Repealed in 2019 to calm the yellow vests, the increase in the carbon tax is however supposed to resume in 2020 and continue to increase significantly until 2030 in the name of the fight against global warming. Is this trajectory definitively abandoned? If so, France would deprive itself of a decisive tool to respect the Paris agreements. Hence the pressure put by the deputy Mathieu Orphelin, close to Nicolas Hulot who left the LREM group on a final blow: a platform in the Figaro of February 13 for “fair carbon taxation”, signed by 86 deputies including Budget rapporteur Joël Giraud (LREM) and two vice-presidents of the Assembly, Hugues Renson (LREM) and Sylvain Waserman (Modem), and Cédric Villani… with the support of Brune Poirson and François de Rugy, at the ministry of the ecological transition. It is a question of continuing to increase this tax but of compensating by redistributing revenues to support the transition to less polluting energies (car bonus, support for renewable energies, insulation of housing, etc.). The subject is explosive. The same day, Macron once again put a stop to the Council of Ministers. “The President of the Republic reminded him: his conviction is that we will not get out of a crisis which began with an additional tax, by creating a new one,” insisted the government spokesman, Benjamin Griveaux for whom the solution, “it is rather less tax than more tax at the end of this debate”.

By encouraging the majority to animate the great debate, the executive had clearly underestimated the passion of the French for taxes … including among its ministers! However, if the demand for tax justice is significant, the tax fed-up is nonetheless generalized. Hence the difficulty of raising the slightest fiscal cursor.

In fact, the Elysee and Matignon would prefer that their troops focus more on the second part of the title “Taxation and public spending”. But in this regard, if everyone agrees that spending should be reduced, ministers and parliamentarians are not rushing to suggest concrete avenues …


Taxation Great national debate