France uses more than other European countries at reduced value -added tax rates, without significant effects on prices. The Board of Mandatory Samples estimates the shortfall at 47 billion euros.
Faced with the purchasing power crisis, the temptation is great for the public authorities to reduce VAT on certain goods and services such as fuel, or on a basket of basic necessities. This idea, originally advanced by the “yellow vests”, taken up by Marine Le Pen in her economic program during the campaign, and still put forward by the national rally recently, when the government announced its “anti-inflation basket “Based on the goodwill of the distributors, is nevertheless dangerous, warns the Board of Compulsory Drawings (CPO), an entity depending on the Court of Auditors, in a report published Thursday, February 9.
France uses more than other European countries at reduced VAT rates – on drinks and food (5.5 %), work (10 %) and energy renovation (5.5 %), Restoration (10 %), travelers transport (10 %), or with specific overseas rates … These devices, which are poorly assessed, have seen their cost double since 2001. However, some have limited efficiency for A high budgetary cost, in particular when they are compared to the practices in force in other countries, underlines the CPO. Without being deleted when their effects on prices, employment or activity have not been demonstrated. Their cost for public finances is however very high: the CPO estimates at 47 billion euros the shortfall arising from existing reduced rates
This is for example the case of VAT at reduced rate in catering, decided in 2009, which was to lower prices, and cost 3 billion euros in 2020. INSEE estimated in 2014 to Only 20 % the rate of repercussions on the prices of this measure, “without achieving the objectives of lower prices and creation of expected employment”, recalls the report. Reducing VAT on a basket of basic necessities is therefore taking the risk of uncertain impact on the prices and purchasing power of the consumer.
Especially since VAT has no effectiveness in reducing inequalities, since the gain for the consumer increases with his income, unlike other classic redistribution tools. At equivalent budgetary cost, the payment of targeted aid is seen as more effective. VAT reduced rates finally introduce a lot of complexity for businesses and the consumer: dark chocolate is taxed at 5.5 % while milk or white chocolate is 20 %, except when it is in the form chocolate candies (5.5 %)…
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