Macron opens the door for further tax cuts

Last week, Emmanuel Macron received Pierre Moscovici at the Elysee Palace to discuss the European elections, but perhaps they also took the opportunity to share their experience in
"Fed up"
. Five years after the current European Commissioner took the term out of his hat, the feeling has not really disappeared and the current head of state recognized this Tuesday the 'Crisis' on the "Deep sense of consent to tax" which embodied the movement of "yellow vests".

"People tell us: 'we have too many taxes, too many taxes'", estimated the tenant of the Elysee. He defended the measures already taken (reductions in the housing tax and social security contributions), but he acknowledged that it was not going fast enough in the eyes of the French. "What we will have to appreciate in the next few months is how we can in-depth accelerate and intensify this project", said Emmanuel Macron, announcing "Profound changes".

Need to lower public spending

Accelerate on tax cuts? Officially the cap remains unchanged on the fiscal front. "Our goal remains to lower the tax rate by 1 percentage point of GDP over the five-year period", says a government source. In 2019, a major step has to be made with the transformation of the tax credit for competitiveness and employment (CICE) in perennial expense reduction which will greatly contribute to reducing the tax burden from 45% to 44.2% of the GDP, despite the increase in fuel taxes. But "If we succeed in reducing our public spending more than expected, it will give us the opportunity to lower taxes further"says Amélie de Montchalin, vice president of the group En marche à l'Assemblée.

While rarely addressing the subject in public, Emmanuel Macron insisted on the need to reduce public spending. "It forces us to review the organization of the state", for "Do better and more services with less", an expression he used twice. "It's a way for the president to put pressure on the government to accelerate the transformation of the state", says one to Matignon.

This has already been launched as a result of the work of the CAP 2022 Expert Committee, which is a major source of inspiration for government action. "We want the public service to be more efficient and closer to people"says Amelie de Montchalin. An important meeting was put on the agenda of the Head of State in this perspective, with a speech on December 12 before the 1,500 senior executives of the public service. "There will be new announcements"we promise to Matignon.

Horizon clogged in 2019

It is only then that this reform of public action – for the moment still very impressionistic – takes shape and gives birth to results that new tax cuts can be envisaged. By which channel? For several weeks now, members of the majority have been talking about the need to tackle the income tax in order to "To reach the middle clbades who feel they are paying a lot of taxes". In any case not before 2020, the deficit still to be close to the threshold of 3% of GDP in 2019.

Renaud Honoré