Public deficit: can the State really save without increasing taxes?

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State accounts are in the red. And the INSEE announcement, this Tuesday, March 26, 2024, does not does not contradict this initial postulate.

The public deficit, which was expected to be around 4.9% by 2023, is finally at 5.5% according to INSEE. Approximately, the public deficit, that is, the difference between income and expenses, is increasing to reach 130 billion euros. therefore it must find money, or spend less. That’s the whole debate.

To raise the taxes? Out of the question for Macronie’s spawn. Cut public spending? This is a possibility mentioned by the Minister of Economy the same, although it is not clearly established. Bruno Le Maire wants reopen the debate on health spending.

Why not raise some taxes?

Increasing taxes remains a solution, currently taboo within the executive, as does reducing social spending. two levers among others. I met with Léo Charles, professor at the University of Rennes 2, member of the Atterrés association of economists, to see what other options there might be.

When we discuss possible solutions with him, he points out above all that “it is not to the government’s liking.” But that does not prevent the economist, author of the book The public debt, have ideas to suggest. Including tax increases. “This is a possibility that should be put on the table,” according to the economist.

There are many ways to increase public revenue without necessarily impacting economic activity or the poorest.

Leo CarlosEconomist, professor at Rennes 2 University

According to the Rennes professor, special attention should be paid to taxes of the richest.

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“Billionaires pay, in proportion to their income, less than the middle classes,” says Léo Charles, recalling in passing that the transformation of the wealth tax into a real estate wealth tax by Emmanuel Macron represents a loss of “five billion euros for the State.

The economist advocates a return to true progressivity of taxes “imposing taxes on the richest who, today, pay less taxes. »

While state accounts are in the red, rumors are growing about an increase in taxes and a reduction in social spending. But is this the only solution? #macron #inflation #taxes

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The VAT issue

always close southwest, Bruno Le Maire spoke about the VAT. Let us remember that this is a tax, a tax that taxes a vast majority of products. She reports to the State, 176 billion euros in 2023.

In reality, the minister wants to reduce the contributions of employers and employees, on the one hand, and, on the other, increase the VAT rate by five points, that is, 60 billion euros. VAT This would finance part of the Social Security budget. Another effect is a reduction in the gap between net salary and gross salary.

Léo Charles recalls that “it is a very regressive tax.” “It will affect the poorest more than the richest: it is very unequal. »

What happens if we want neither a tax increase nor a reduction in social spending?

Overall, the economist mentions other ways to bring money into state coffers, such as the fight against tax evasion: “in 2023, we will have recovered around fifteen billion euros. »

If we make the effort, in terms of hiring officials, to control better, I think we can reach 30 billion.

Leo CarlosEconomist, professor at Rennes 2 University

He also believes that “certain public aid to companies, 200 to 260 billion euros per year“They are totally ineffective because they are captured by the largest companies.”

The economist also suggests looking at the side of “460 tax loopholes”. “It’s not about eliminating everything, but we could free up around thirty billion in this regard,” she estimates.

The eternal debate about superprofits

Finally, the last lever mentioned, although there are others, the question of superprofits. Léo Charles welcomes hitting the portfolios of these large groups, which have taken advantage of the global situation (war, covid) to increase their profits exceptionally. Kind of an unexpected effect.

Although Bruno Le Maire is not in favor, the idea is still valid in the ranks of the majority. The president of the National Assembly, Yaël Braun-Pivet, took the first, saying he was willing to “start thinking” about an “exceptional” contribution to the “super profits” or “super dividends” of big companies.

A measure requested by the left-wing opposition for months.

“Since 2020, inflation has been driven by profits. That is to say that large companies are taking advantage of the current situation to obtain income. Is harmful to the economyIt’s taxable! », assures Léo Charles. The academic, however, remains lucid on the matter and fears that the executive will resort to social aid.

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