A shared diagnosis, but opposing solutions. Delivered last week by the Finance Committee of the National Assembly, the flash mission on superprofits finally made it possible to characterize the existence of “windfall profits”, “against the tide of the global economic situation”but not to reconcile the left and the presidential majority on how to deal with them.
While the Nupes argues for a tax that would affect all companies with more than 750 million euros in turnover, the government only wants to cap the income of electricians currently benefiting from low-cost electricity produced by nuclear or renewables. A measure that would bring in between 5 and 7 billion in 2022.
On both sides, the arguments fuse, and risk monopolizing the discussions which open this Monday, October 10 in the Assembly around the finance bill. “At a time of inflation, it is unsustainable that certain large groups are gorging themselves on the backs of the French”, Nupes storm. “Taxing these profits would threaten the millions of jobs represented by these large groups in France, but also the billions of investments needed for the energy transition”, reply the defenders of the supply policy defended by the majority. In other words, impossible in Macronie, where the tax cut has been made a real red line not to be crossed.
Without resolving this epidermal and ideological debate, it seems in any case interesting to recall what the large groups weigh in national solidarity. Every year, Afep, the spokesperson for large companies in France, produces a report on the contribution of its 110 members to the French economy. Hoping to add its stone to the ongoing controversies, the association recently leaked these updated figures to the press.
Significant participation in the collective effort
In 2021, the members of Afep, who represent 2.1 million employees in France (i.e. 12% of private employment), would have contributed 18% of all the compulsory levies of companies in France. Or 77 billion euros in taxes and contributions of all kinds which in 2021 abounded the coffers of the French State.
A monumental sum which breaks down as follows: 45 billion from compulsory levies on labor (higher, it is certain, than among our European neighbors), 12.8 billion from sectoral taxes, 6.5 billion from taxes of production (including 2 billion CVAE, contribution on the added value of companies that the government wishes to eliminate in two years), and 13 billion to be put on the account of corporate tax (IS).
“Despite the fall in the IS rate last year, this figure increased from 10 to 13 billion euros between 2020 and 2021, which proves that the supply policy is working”, welcomes the Afep, which does not specify that the billions paid by the States during the pandemic are also for a lot in the historic profits of last year.
Large companies pay less corporate tax than small ones
This is not his only inaccuracy. Because, despite this undeniable contribution to the good performance of the French economy, large companies pay much less corporate tax than small ones. In 2011, a report by the deputy Gilles Carrez (Les Républicains) had inflamed the spirits, showing that there were 20 points of difference in taxation between large groups and VSEs-SMEs, due to tax mechanisms allowing part of the deficits to be deferred on the profits of the following year, or to deduct the interest on loans from the taxable results.
In 2019, a report by the highly respected Institute for Public Policy (IPP) revised this gap downwards, with an estimated effective tax rate of 18.7% for large companies, compared to 22.3% for SMEs. To explain the reduction of this gap, the authors of the study highlighted the fall in interest rates on the markets, limiting the possibility for companies to allocate them to their taxable results.
Tax evasion that remains
Except that, by nature, these figures say nothing about this well-known practice of tax optimization of multinational tax specialists, consisting of placing part of their profits in tax havens. While it is very difficult to measure the phenomenon, a survey by the Economic Analysis Council (CAE), responsible for advising the Prime Minister, estimated in 2019 that the loss of tax revenue resulting from relocations to tax havens of activities s amounted to 4.6 billion euros per year, including 3.3 billion from French groups.
“As long as the international agreements of the OECD to limit tax evasion are not transposed into French law, there is no reason for these practices to disappear”, considers the former president of the CAE Philippe Martin, according to whom the French Ministry of Finance has always been less careful about the tax optimization of French companies compared to that of the American digital giants.
The particular case of Total and CMA CGM
Since the end of the health crisis, and with the war in Ukraine, which has allowed some of these companies to generate gigantic profits, the question of the taxation of these giants has therefore come up insistently. “ The problem is when some companies do not pay tax in France, even though a large part of their activity is hosted there”, points out Manon François, from the EU Tax Observatory research laboratory.
This is particularly the case of TotalEnergies, which generates around 20% of its turnover in France, employs a third (35,000) of its employees there but did not pay corporation tax in 2020 and 2021. If we are to believe the figures published in a recent survey by the magazine The Obsits global tax rate would have risen to almost 45% in 2021 due to the numerous taxes paid in the countries of production.
As for CMA CGM, one of the other big profiteers of the crisis, the group only paid 2% in taxes in 2021, despite its 16 billion euros in profits, this time due to a tax regime very favorable to shipowners.
Even if the deputies manage to agree, how can companies that pay no or very little corporate tax in France contribute? To circumvent this difficulty, the LFI deputies propose the creation of two mechanisms: the first would make it possible to tax all the companies having a turnover higher than 750 million euros, and having posted a higher profit of 25% compared to the average of the last four years.
The second contribution would be directly based on the sales of the companies, so that CMA CGM and TotalEnergies are concerned. Two mechanisms already criticized for being either inapplicable or much less profitable than expected (30 billion according to LFI). Under the guise of numbers, the ideological dispute has only just begun.
Income tax rates have fallen around the world
Corporate income tax rates experienced a decline over the last twenty years on the international level.
They went on average from 28.6% in 2000 to 21.4% in 2018, according to the latest available OECD figures.
According to the OECD, France and the United States are the countries in which the rate fell the most between 2017 and 2018, with a respective drop of 10 points and more than 13 points.