The government anticipates a decrease in levies in 2018 while the institute expects a rise of 4.5 billion euros.
Thursday was to be, at the Ministry of Finance, a day of celebration. Indeed, the deputies have definitively adopted, in the morning, the draft budget for 2018. Only, the INSEE has spoiled the party. The National Institute of Statistics and Economic Studies published Tuesday, in its December economic update, an unexpected estimate of the impact of government tax measures on the purchasing power of households in 2018. According to the latter, the compulsory levies (taxes, taxes and social security contributions) paid by French households will increase by 4.5 billion euros next year, affecting purchasing power by 0.3 points.
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The figure is in apparent contradiction with those of the government, which has been hammering since September that taxes will fall next year. It estimates that its only mandatory tax measures will reduce household bills by 1.8 billion euros in 2018, then by 5.5 billion euros "in a full year", that is to say in 2019. And again, it is without counting the increase of the activity premium of 20 euros per month and the revaluation of the supplement mode of guard of 30% in October, as well as the increase of the minimum old age in April, insists- is there government? However, this was not the purpose of the INSEE costing. The statisticians have indeed attached themselves, in the technical box incriminated, to unravel the calendar effects for the least complex fiscal measures in 2018.
Because the INSEE and the Ministry of Finance do not try to measure the same thing. The institute wants to evaluate the impact of tax choices on the evolution of the purchasing power of the French. This, to determine if households will consume more or less next year and therefore, whether or not they will grow economic growth. Bercy, on the other hand, calculates the cost tax gestures for the 2018 state budget.
The methods of both differ mainly in the assessment of increases in tobacco taxes and energy taxation. This explains 85% of the discrepancy. INSEE estimates that these two increases will increase the purchasing power of households by more than 0.5 point next year, or about 8 billion euros. A heavy increase offset by decreases in levies elsewhere. Bercy, on the other hand, has calculated that increases in energy taxes and tobacco taxes will bring much less to the state - and therefore cost less to the French - or 2.7 billion euros.
Experts on both sides are struggling to explain this incredible gap of 5.3 billion. However, Bercy argues, a large part of the gap is explained by the fact that INSEE reasons to consumption behavior unchanged. An obligation inscribed in the rules of national accounts, the methodology that the Institute of Statistics must follow to the letter. Concretely, the rise in tobacco taxation does not lead in its model to a decline in cigarette consumption, estimated at 2% of household purchases. But that is precisely the purpose of the maneuver! Bercy reasons, in this case of tobacco, by integrating changes in behavior. He estimates that a rise of 100 euros in tobacco taxes will bring him only 75 euros of tax revenue, the French reacting by smoking less.
With regard to energy taxation, INSEE applies the tax increase to the weight of fuel, oil or gas heating, etc., in household consumption, that is to say 5%. The Ministry of Finance, for its part, shares what these taxes report in 2017 and estimates from there how much will report the increases decided for 2018. Either 3.7 billion euros, businesses and households combined. Bercy estimates, however, that households will only receive 60% of this increase, again reducing the bill estimated for the French. A real imbroglio.
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Source: © Bercy and INSEE get down to the impact of tax measures in 2018
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