LPublic finance is not an exact science, but neither is it an occult science. Unexplained phenomena are rare. However, this is what happened at the end of 2023 when the Bercy teams had to resolve to reveal the existence of a hole of 21 billion euros in the fund. Taxes that did not come in as they should have. Or, at least, as they had planned.
A forecast shift of 21 billion euros remains unprecedented outside of a crisis period. That’s about as much as the executive is forced to save this year. This gap explains the slippage of the public deficit in 2023 to 5.5% of GDP compared to 4.9% forecast, causing a political storm a few months before the European elections, and fueling a dangerous incompetence trial.
The Minister of the Economy, Bruno Le Maire, promised to investigate, and blamed the slowdown in inflation – which weighed on VAT revenues and social security contributions – and the banks – which would have paid less of corporate taxes –, the energy companies – which he failed to tax as much as expected –, their regulator – who had incorrectly estimated what their “superprofits” would be –, the real estate crisis – which penalized transfer taxes…
Political procrastination
For the oppositions, it is understood: the government ignored the alerts of its own services, and those of experts like the High Council of Public Finances, which judged, for example, that the situation of the real estate market would have an impact on the public finances higher than the government anticipated. Maybe. In recent years, the same people have criticized the Treasury Department at Bercy for deliberately underestimating its tax revenue forecasts, both to create good surprises a posteriori, and to leave the possibility of discreetly financing new expenditure in during the year, without increasing the deficit. Of which act.
The Treasury built its 2023 revenue forecasts on the basis of those observed in 2022 and 2021, correcting them slightly. The problem is that these two years have proven to be exceptional, combining a very strong rebound in activity (6.4% growth in 2021 and 2.5% in 2022) and unusually high inflation, very conducive to tax revenues. Bad luck, 2023 turned out to be less auspicious. The powerful management of Bercy is today accused of having been too optimistic. There was undoubtedly added a little political procrastination.
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