Wednesday, May 18

Desinfox. Does France really hold “the European record for debt, public spending and taxes”?

“Mr. Macron has nothing to do with the right,” said Eric Ciotti, the LR deputy of the Alpes-Maritimes, this morning on France Inter. To demonstrate this, Valérie Pécresse’s “authority” advisor spoke of the way in which the executive managed public finances during the five-year term. “When you have the European record for debt, public spending and taxes, you are not on the right,” he said in particular. But is he right to advance this?

No on debt

Let’s start with the public debt, in other words all the loans issued by the State, local authorities and social security organizations. In France, in 2020 it represented 115% of the national GDP (gross domestic product) according to Eurostat. It is well above the European average (90.1% of GDP in 2020 *).

But contrary to what Eric Ciotti claims, we are far from holding the European record. Our country is actually ahead of Greece (206.3% of GDP), Italy (155.6% of GDP), Portugal (135.2%), Spain (120%) and Cyprus (115 , 3%). Also according to Eurostat, the least indebted Member States are Estonia, Bulgaria and Luxembourg (see graph below).

Yes on public spending

Let’s move on to public spending. INSEE defines them as “expenditure made by the State, social security administrations, local authorities and the administrations and organizations attached to them”. In 2020 in France, they amounted to 61.6% of GDP according to Eurostat. What makes our country the one with the most public expenditure in the European Union as a percentage of GDP (see graph below).

In second place in the ranking, we find Greece (59.8% of GDP), followed by Belgium (59.2%), Finland (57.3%) and Austria (57.1%) . Ireland, Bulgaria and Romania are the three countries with the lowest public expenditure in 2020 (respectively 27.4%, 41.8% and 42.2% of GDP). The European average was set in 2020 at 53.1% of GDP.

Not really about taxes

Finally, taxes, which for INSEE are “compulsory and unrequited payments to public administrations”. Contrary to what one might think, France is not the country where compulsory contributions (imputed social contributions included) are the highest (in% of GDP). But very little (see graph below).

In 2020, they represented 47.5% of the national GDP in France according to Eurostat, barely less than in Denmark (47.6% of the country’s GDP). On average, the weight of compulsory levies within the EU is 41.3% of GDP. Unsurprisingly, it is in Ireland, a tax haven, that they are the weakest (20.8% of GDP).

If we exclude social security contributions and we look at taxes as such, we also notice that France is not the EU country where those on income and assets are the most high (as a% of GDP). According to Eurostat, in 2020, our country was in seventh position, behind Denmark, Sweden, Finland, Luxembourg, Belgium and Italy. We are even close to the European average: in France, taxes on income and wealth are equivalent to 13.2% of GDP, against 13% at the level of the 27 Member States.

And France is not the European country where taxes on production and imports are the most important (as a% of GDP). Always after Eurostat data dated 2020, Sweden, Croatia and Hungary lead the ranking, followed by France (16.9% of GDP, against 13.2% on average in the EU).

In summary, Eric Ciotti is wrong to say that we hold the European debt record. On the other hand, he is right when it comes to public spending. As far as taxes are concerned, it is more complicated than that. Our deduction rate is almost the highest in Europe, but it takes into account social contributions, which are very high (14.4% in 2020 according to INSEE), and which are used to finance social benefits.

* Latest figures available

Reference-www.leprogres.fr

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