Withdrawal at the source: struggle for figures on tax revenues

The deadline is fast approaching. At the Hôtel des ministres in Bercy, the countdown, located near the office of the minister of action and public accounts Gérald Darmanin, shows on a screen in real time the 55 days remaining for the implementation of the withholding next 2 January. During a press conference on Tuesday, November 6, the young minister of the republican ranks was in mine clearance operation. After several months of debate and controversy, Gérald Darmanin that assured "everything is OK." He further explained that the security level was assured. "The ANSSI (National Agency for the Security of Information Systems) has launched audits to test the robustness in terms of IT security systems, DGFiP and Net companies, and has confidence in system protection that is largely secure and under control."

Surrounded by the staff of the General Directorate of Public Finance and that of the Ursaff, he assured that "Every week there were meetings with the various administrative departments to see what went well and what was wrong." The monitoring committee is there for "follow the march to the target of January and identify the last possible difficulties to solve them ", Bercy assures. But behind this communication exercise is the expected amount of income from setting up this new collection system far from unanimous.

Government versus Court of Auditors

At the press point, the Public Accounts Officer indicated that he hoped to improve tax revenues by almost EUR 700 million related to the income tax due to this reform. "The recovery rate of the income tax is very good, it is almost 98%," he assured. But the "recovery of social security contributions", made through the Nominative Social Declaration (DSN), is even more important because it is 99% recovery ", the minister continued, saying that this system "prevent almost fraud".

Given the use of the Nominative Social Declaration (DSN) for the collection of income tax, which is directly deducted from taxpayers' salaries, the Ministry of Finance considers it possible to improve the collection of income tax by one point. The latter yields about 70 billion euros per year. Moreover, the Minister explained that the declaration is in principle mandatory "mAlmost 2.5% of the population does not commit to it every year, sometimes for fraudulent purposes, but mostly by accident, some non-taxpaying taxpayers believe that it is not necessary when you pay no tax, " says AFP. "We can therefore wait up to 700 million euros in extra tax revenues, without increasing French taxes, but by looking for tax at source", among those who have to pay, explained Gérald Darmaninreferring to taxpayers who do not file a tax return.

At the Court of Auditors revenue from tax revenues expected from withholding tax is much less accurate. In an appendix to a report that was published last Junethe public institution emphasized the uncertainties associated with this reform. And the risk to public finances is far from negligible. "Overall, the uncertainties about the performance of the GSP in 2019 could amount to around EUR 2 billion, or 0.1 of GDP, up or down. "

Uncertainties about the recovery rate

Several factors explain the risks for public finances. The first mentioned by the authors concerns the rate at which the income tax is recovered. It is currently 95%. The goal is that it ultimately meets the pace of restoring social security contributions from the private sector (ie 99%). However, it seems that judges are less convinced than members of the government about the performance related to this method of collecting.

"In the short term there may be a rising delay, leading to a lower rate in the first year: the government assumes that this will be 97%. The uncertainty in the recovery rate actually observed leads to considerable uncertainty in the performance of the measure: if the interest rate was kept at 95%, the result would be a loss of turnover of approximately € 1.5 billion; conversely, if it reaches 99% in the first year, it is a profit of 1.5 billion euros that would be committed. "

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The second factor of uncertainty is based on the possibilities of modulating the withholding tax during the year. Indeed, given the opportunity to taxpayers to change their rate, which allows one simultaneity the levy, can feed the vagueness of possible tax revenues by the executive. In addition to the uncertainty about public finances, the minister of government accounts also mentioned an estimate of the costs of reforms for business. "The cost of implementing business reforms with the software update could reach 350 million euros for the 1.7 million companies in France,"he said.

"Three quarters of the errors are related to the taxpayer"

After an attempt to reassure the public, the former mayor of Tourcoing nevertheless raised a number of concerns. The first concerns "people who have not been spotted in tax returns […] Many French people do not make income tax returns, but can benefit from a tax reduction. " He also mentioned examples of more difficult things to deal with, such as young people who left their parents' tax house, people who returned to France from abroad, or a number of independent professions such as doctors.

Finally, Bercy kept being reminded taxpayers vigilant about modulation of rates in case of income evolution. If this measure can have benefits, many French people can omit or forget their rate. This can also be an additional difficulty to manage for the tax authorities. Despite these potential obstacles, Gérald Darmanin remembered that "In the current system, of the three million claims per year, three quarters of the taxpayer's mistakes are dependent."