Emmanuel Macron’s government gave tax breaks for France’s wealthiest while counting on purchase taxes paid by ordinary consumers. Now saying it has a budget hole to fill, his administration is again expecting working-class people to pick up the bill.
by Marlon Ettinger
Part 2 - A False Narrative
That’s a narrative that Marine Le Pen and her Rassemblement National (RN) have bought into deeply, and sold to voters, on their march to power. In recent years, Le Pen has pointed to deficits to warn that “saving” France’s pension system poses a choice between unlimited immigration or an explosion in birthrates. She’s stood shoulder to shoulder with France’s business elites to claim that the country is facing “a wall of debt.”
Absent spending cuts or new taxes, France’s deficit next year will hit 6 percent. That’s twice the level that the European Union nominally allows its member states to maintain. Barnier’s budget was trying to reduce the deficit to 5.1 percent by the end of 2025. Bayrou has long warned that the deficit needs to be held under 2 percent to reduce debt.
Inflation, low growth, and low wages have all hit France’s working class hard in recent years, despite the protections of the social model established after World War II.
In mid-November, Le Pen and the government showed their hand when they rejected a raft of budget amendments proposed by the left-wing New Popular Front parties in parliamentary committees, which aimed to address those problems and save France’s social model by raising taxes and spending. During committee votes the centrist bloc often didn’t bother showing up to oppose the measures, knowing that Barnier would later use constitutional powers to push the original, unamended budget through. For their part, the Rassemblement National voted for certain measures like a tax on the rich at the committee stage, then turned around and voted with the government against the budget when it had a chance to pass. They said the budget had been “deformed” by left-wing amendments.
In mid-November, Le Pen and the government showed their hand when they rejected a raft of budget amendments proposed by the left-wing New Popular Front parties in parliamentary committees, which aimed to address those problems and save France’s social model by raising taxes and spending. During committee votes the centrist bloc often didn’t bother showing up to oppose the measures, knowing that Barnier would later use constitutional powers to push the original, unamended budget through. For their part, the Rassemblement National voted for certain measures like a tax on the rich at the committee stage, then turned around and voted with the government against the budget when it had a chance to pass. They said the budget had been “deformed” by left-wing amendments.
According to Éric Coquerel, a veteran La France Insoumise MP who is also the president of the National Assembly’s powerful finance commission, that budget contained €75 billion in new taxes on “very big business and the richest of our fellow citizens.”
That amount would be more than enough to plug France’s steep deficits.
But the current political battle isn’t just about balancing the budget. If that were the case, La France Insoumise’s tax-the-rich agenda would be a quick, easy, consensus way out. The battle over the budget is also a battle over whether the social democratic bargain established in France at the end of World War II will continue to be kept.
That amount would be more than enough to plug France’s steep deficits.
But the current political battle isn’t just about balancing the budget. If that were the case, La France Insoumise’s tax-the-rich agenda would be a quick, easy, consensus way out. The battle over the budget is also a battle over whether the social democratic bargain established in France at the end of World War II will continue to be kept.
A crisis in funding for local authorities is a window into the theory that the government is manufacturing this budgetary crisis, though not everybody agrees what the solution should be.
At the end of October, Jean-Léonce Dupont, a former senator, vice president of the Committee on Local Finances, and president of the département of Calvados, warned senators that France’s local authorities could face a collapse in département-level investment by the end of 2025. The degraded state of their finances is so bad, he said, that if nothing changes France’s 101 départements will no longer be able to make payments by the end of 2025, and might have to be placed under the fiscal control of the central state administration.
At the end of October, Jean-Léonce Dupont, a former senator, vice president of the Committee on Local Finances, and president of the département of Calvados, warned senators that France’s local authorities could face a collapse in département-level investment by the end of 2025. The degraded state of their finances is so bad, he said, that if nothing changes France’s 101 départements will no longer be able to make payments by the end of 2025, and might have to be placed under the fiscal control of the central state administration.
Dupont told senators, who were looking into the financing of local authorities, that the government had lied in its growth projections to try to cover a massive and growing hole of its own making. He also said that the state inflated its forecasts to give a false impression of how much revenue the VAT would bring in at the same time as they abolished local taxes that previously funded these département-level authorities.
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