Deputies denounce the state’s myopia on tax loopholes

Very uplifted. The deputies of the Finance Committee clearly pinned the State for its serious shortcomings in the control of tax loopholes. Gathered on June 13 to close the “Spring of Assessment”, an unprecedented exercise during which they hear the ministers on their budgets, they sounded the alarm on the shortcomings of the executive regarding the 478 niches taxes, totaling more than 100 billion euros, or a third of tax revenue and no less than 4 points of GDP. “The executive knows the number of beneficiaries for exactly 252 niches. For the others, he does not know anything ”, deplores François Jolivet, LREM deputy, author of a“ motion for a resolution ”aimed at forcing the State to fill this worrying statistical void.

“Take the Pinel devices (tax cuts in rental investment): the housing ministry is unable to specify where beneficiaries have invested. And for the CITE (tax credit for energy transition), he does not know who benefits from it ”. A diagnosis confirmed by François Ecalle, founder of the Fipeco site and specialist in public finances: “the cost of 70 tax expenditures is not measured and only an order of magnitude is available for 184 of them”. The deputies therefore want to launch an “injunction”, according to François Jolivet, to the government to finally measure this jackpot of niches. “The ministries in charge of the implementation of public policies do not ensure a sufficiently detailed monitoring of these devices”, specifies, in diplomatic language, the motion for a resolution, which will be integrated into the 2020 budget.

Remove inefficient niches

Not only does the State not know its tax loopholes but in addition, it renews them with its eyes closed. In the reform of the LOLF (Organic Law on Finance Laws), which revolutionized the budgetary procedure in 2001, parliamentarians had obtained to re-examine all public expenditure each year, whereas previously 90% were automatically renewed. Except for “tax expenditures”, therefore the niches. “Their tacit renewal remains the rule, their questioning the exception”, deplore the deputies.

Today, they would like the executive to assess the effectiveness of these devices, to remove them if necessary. “Niches are rarely evaluated and when they are, it often appears that their efficiency is limited”, adds François Ecalle. Recent and revealing example: in a report submitted to deputies in March, the Court of Audit crushed the 18 billion euros of tax loopholes in favor of housing granted inconsistently and almost blindly, according to financial magistrates who question the “usefulness” of these tax rebates https://www.challenges.fr/economie/logement-le-grand-gachis-des-niches-fiscales_649038. “The Court insisted on limiting the duration of existence of these devices, they write, and to allow only tax expenditures which, after having been rigorously evaluated, have shown their efficiency” to continue.

Means much too low

No doubt. The burden of parliamentarians to push the executive to finally sort through the hundreds of billions of tax gifts is therefore beneficial. But its impact is likely to be limited. Because the deputies do not have the means to go themselves to seek the faulty information on these niches, to evaluate their impact and to recommend deletions, as is the practice in countries which have a powerful Parliament, like UK or USA. This “spring of evaluation” is certainly a welcome exercise which obliges ministers to come and explain their policies and their budgets. But the weakness of the resources devoted to the evaluation of public policies remains confusing. The idea of ​​creating a parliamentary evaluation agency pushed by Francois de Rugy, former president of the National Assembly, was buried by his successor Richard Ferrand in the fall. https://www.challenges.fr/politique/les-deputes-peinent-toujours-a-evaluations-l-impact-des-lois_656782 With around thirty experts and a budget of 5 million euros, the project designed by the deputies Jean-François Eliaou (LREM) and Jean-Noël Barrot (Modem) was however much more modest than that of its foreign counterparts. In the United States, the dreaded Congressional Budget Office has 235 experts to support American parliamentarians, while in the United Kingdom, Parliament relies on the 800 specialists of the National Audit Office. With such a strike force, the offensive to clean up tax loopholes would have taken on a whole new dimension …