Ln July 23, the deputies voted to abolish the audiovisual license fee, Emmanuel Macron’s campaign promise. Beyond the debates on the independence of public broadcasting that this decision raises – the tax being compensated by the allocation of a fraction of the VAT -, this abolition is added to the long list of tax cuts engaged since 2017.
In five years, the list of taxes abolished or reduced has continued to grow: reform of the ISF, abolition of the housing tax, reduction in income tax, reduction in tax on capital income, reduction in production taxes, reduction in corporation tax, reduction in unemployment and sickness contributions and now the abolition of the audiovisual license fee. In total, between 2018 and 2022, the State has lowered compulsory levies by an average of 10 billion euros each year, to reach a total of 57 billion euros. As a result, the share of compulsory levies in gross domestic product (GDP) fell from 45.1% in 2017 to 43.4% in 2022, substantially their 2012 level.
While certain tax reductions were justified, with a view to fairness (abolition of the housing tax) or efficiency (reduction of production taxes), it is regrettable that many of these were made at the detriment to tax justice.
This is notably the case of the reforms concerning taxation on capital. The introduction of the “flat tax” on capital income (known as the single flat-rate levy) has thus led to an increase in the payment of dividends, without noticeable effects on investment. Moreover, the concentration of these dividends has increased in favor of the wealthiest 0.1% of households. Similarly, the impact on investment of the transformation of wealth tax into real estate wealth tax is undetectable by the evaluation committee of these reforms, coordinated by France Strategy. Therefore, the justification of these tax cuts, mainly benefiting the wealthiest, is struggling to make itself known.
The increased indebtedness of the country
In reality, the main impact of these measures is the reduction of the State’s capacity to finance its public policies. The Court of Auditors considers in its 2022 annual report that, between 2019 and 2022, the structural deficit – a deficit which does not take into account the effects of Covid-19 – “would thus have deteriorated under the combined effect of the tax cuts implemented and new long-term expenditure”. In other words, the tax cuts have contributed to increasing the country’s debt. Tomorrow, they will be able to justify the cut in additional public spending, to absorb a deficit that they have helped to increase.
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