Wednesday, 26 January, 2022

The billions of tax loopholes for housing pinned by the Court of Auditors

“Hardly readable objectives”, “underestimated cost”, “evaluations which are still lacking” … In a report submitted to deputies in March, that Challenges has obtained, the Court of Auditors curbs the 18 billion euros of tax loopholes in favor of housing. These tax reductions are granted inconsistently and almost blindly, to believe the financial magistrates who even question the “usefulness” of these tax rebates. “The Court strongly recommends to limit the duration of existence of these devices, they write, and to allow only the tax expenditures which, after having been rigorously evaluated, have shown their efficiency.”

Indeed, the effects of these costly tax benefits have very rarely been measured by successive governments. And this, despite repeated promises. The Pinel tax reduction to promote rental investment (351 million euros) or the zero-interest loan (746 million euros), which were to be assessed in 2018, have still not been been studied. As for the reduced rate of VAT on work carried out in homes over two years old (3 billion euros), it has not been the subject of “any serious study” on its impact in the building sector. The few job creation figures mentioned by the government actually come from the French Building Federation …

Missed target

According to the magistrates of the Court of Auditors, the billions of tax loopholes in favor of housing are actually largely missing their target. The tax incentives for rental investment (Scellier, Pinel, etc.) lead to “overproduction” in the less strained areas and “have not made it possible to develop a private rental supply in areas in tension with an effect on the moderation of rents “.

Likewise, the reduced VAT on works, the tax credit for energy transition or the eco-PTZ (zero rate loan) “are ultimately inefficient from an energy point of view because they do not take into account the overall energy quality of housing “.

To promote insulation and energy efficiency work, the financial magistrates also advocate replacing these tax advantages by targeted subsidies which “would be less expensive” and “would allow better achievement of objectives”.

The Court of Auditors is even more severe on the tax concessions granted to social housing organizations. The corporate tax exemption “is likely to favor comparatively organizations building little or having a stock occupied by wealthier households than the average”, she denounces. And, with regard to local tax reductions from which social housing organizations benefit, the Court of Auditors points out that “the communities financially most penalized by this device being those for which the need for financing social housing is the greatest. “. Ultimately, the Court also recommends the outright abolition of these exemptions.

Benefits that benefit the rich

More seriously, the 18 billion tax advantages in favor of housing benefit first the richest French, deplore the magistrates. “The main final beneficiaries of these measures are neither intermediate or modest tenants nor first-time buyers, they note. Upon analysis, it appears that they are the donor investors or households located in the upper deciles of mus by an objective of profitability or the search for profit which benefit the most from these measures. ” Examples: the tax credit for insulation work or the eco-PTZ are mainly used by the wealthiest households.

In total, since 2012, the tax benefits granted to owner-lessors have increased by 89%, while the rebates granted to owner-occupiers have decreased by 27%, “to the detriment of the most modest”, notes the report. “The first stated objective of the housing policy is, however, to increase the share of owner households,” recalls the Court of Auditors. Without appeal.

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Court of Audit

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