Record French tax haul shows how much corporate tax dodgers cost us all

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French tax services netted a record 21.2 billion euros from tax dodgers last year. And the biggest culprit was big business, a result that should lead the government to dissolve the units responsible since, like most governments nowadays, practically its sole job-creation strategy is to let companies off paying their fiscal share.

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France’s Economy Ministry Photo: Pline/Open access

More than a quarter of the tax-evasion haul – 5.8 billion euros – came from corporate tax fraud, up from 4.2 billion euros in 2014.

Individual tax-dodgers with secret bank accounts abroad, no doubt panicked by Luxleaks and the UBS investigation, fessed up to the tune of 2.65 billion euros.

“We have to lay to rest this idea that income from tax inspection comes from hammering small taxpayers,” Budget Minister Christian Eckert pointed out in a rare counter to the right-wing – sorry, “centrist” in establishment-speak – offensive against the state collecting its due. “It’s not true! Income from tax inspection comes essentially from big companies.”

The indiscreet junior minister probably won’t keep job for long if he carries on in that vein.

Because France’s Socialist government has pursued an energetic policy of cutting taxes to business, on the pretext that boosting profits will persuade bosses to take on more workers, with only a minor deviation this year in the form of a labour law pretty much drafted by the Medef bosses’ union.

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The share of dividends in French companies’ operation profits

It’s a strategy that has proved startlingly unsuccessful. Unemployment remains at 10 per cent as companies have paid out the tax handouts in dividends, an international tendency to short-term gluttony that is particularly virulent in France.

Given that the 2014 Socialist government contained no fewer than eight millionaires, one can imagine that it feels more collective empathy towards those struggling to maximise their wealth than those struggling to survive on the breadline – even if the cabinet’s net worth must have taken a hit with the departure of the fabulously wealthy Laurent Fabius.

So the DVNI, the division responsible for chasing up companies with a turnover of more than 154.2 million euros at whose headquarters Eckert and Finance Minister Michel Sapin announced the good tax news, would be foolish to aspire to longevity.

If we follow the government’s logic, following the current economic orthodoxy, it should be closed down and those companies allowed to carry on fiddling their tax returns in the hope that they will be kind enough to employ a few more members of the lower orders with the gains made from their accountants’ creativity.

Indeed, the tax windfall, which has been one of the only positive contributions to the EU-ordered effort to reduce the deficit, seems to have been pretty much an accident.

The unit to pursue holders of secret foreign accounts was set up after budget minister Jérôme Cahuzac was found to be guilty of that very offence and forced to resign. His case opened last month and, the defendant having arrived lawyered up, been put off until September.

Successful though the tax inspectors have been, unions have complained that they could do better with more resources.

That’s certainly true if estimates of the level of tax fraud quoted by the ministry are true. They put the figure at 60-80 billion euros, so 20 billion should be just the beginning if ministers were serious about tackling white-collar crime.

Eckert’s statement is important – and not just in France – because campaigning against taxation has been the right’s most effective weapon in winning middle and working-class support for policies that have actually shifted wealth away from most of the population.

Tax is the Achilles’ heel of collectivism. Most of us want good public services but we’d all rather somebody else pay for them. At the very least, we’ll take any opportunity to reduce the amount of tax we personally have to pay. The right has played on that conflict between immediate individual interest and delayed collective gratification with enormous success.

An important component of most right-wing campaigning issues – benefits fraud, migrants, “wasteful” public spending – is an appeal to the wallet. And, although there seems to be growing scepticism about capitalism and a revival of some form of collectivism among the young, Donald Trump, or France’s Front National, are evidence of the kind of mass reactionary movements that will be whipped up and manipulated if the interests of the wealthy are ever seriously challenged.

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