Macron’s five-year tax cuts have more benefited large companies – archyworldys

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While the Minister of the Economy Bruno Le Maire is to be heard on the finance bill for 2022 (PLF 2022) in the Senate this Wednesday, economists from the Institute of Public Policies (IPP), a research center attached at the Paris School of Economics (PSE), unveiled this Tuesday, November 16, a detailed assessment of sustainable tax measures in favor of companies over the entire five-year term of Emmanuel Macron. The two key levers studied relate above all to the reduction in corporate income tax (IS) which should drop from 33% to 25% between 2017 and 2022 and the reduction in production taxes, long demanded by a large part of the employers. .

This supply-side tax policy has mainly benefited medium-sized companies (ETI) and large companies, the economists explain in their conclusion.

“The two long-term measures (lower corporate tax and production taxes) are of little benefit to companies having suffered a Covid shock. The Covid aid measures have targeted the companies most exposed to the shock of the crisis”, said the economist of the IPP, Clément Malgouyres during a press briefing.

Lower corporate taxes: winners and losers

In total, the reduction in corporate tax is estimated at 52.5 billion euros over the entire Macron five-year term (10.5 billion euros each year). To this envelope, are added the 13 billion euros of production tax cuts recorded in the 2021 and 2022 budgets by the research laboratory. The big winners of this tax policy are “industrial, capital-intensive companies, but little affected by the health crisis “ explain economists. Major beneficiary sectors include energy, water and waste, industries, and electronics and IT.

Conversely, construction, transport or hotels and restaurants appear at the bottom of the table. Finally, the reduction in production taxes incorporated into the recovery plan primarily benefits the manufacturing sector and energy.

“A significant proportion of the stimulus plan rolled out in 2021 is focused on untargeted support for businesses, in particular through the cut in production taxes. These measures, in a context of high uncertainty, will be low. effective in boosting short-term investment and will have a low multiplier effect “, indicate the economists of the French Observatory of Economic Conjunctures (OFCE) in their book “The French economy 2021”.

The reduction in production taxes had been criticized by a large part of the local communities dependent on these resources. The Minister of Public Accounts Olivier Dussopt had indicated, in an interview with The gallery this summer, that the communities would be compensated in an “integral and dynamic” way.

“We did things that the left had never managed to do”, Olivier Dussopt

Emergency measures: more targeted aid from autumn 2020

Loans guaranteed by the State, partial unemployment, solidarity fund, postponement or cancellation of social contributions … the government has deployed a large panoply of emergency aid measures in the face of the crisis.

After the implementation of “whatever the cost” announced by the Head of State Emmanuel Macron in the spring of 2020, the State and the various administrations have absorbed a large part of the economic shock, allowing the productive fabric to emerge of this health crisis without too much damage.

“The aggregate shock on national income is considerable, and has spread across companies in a heterogeneous manner. 60% of the private sector has seen its turnover drop. The impact of the shock on bankruptcies is concentrated on firms. having suffered a very sharp drop in their turnover. Unsurprisingly, the impact of the shock on bankruptcies is concentrated on the sectors most affected. For a large number of companies, the government has distinguished several sectors (S1, S1 bis). It is possible that this targeting was not of very high quality during the first wave “, explained economist Laurent Bach, director of the business program at IPP and teacher at Essec.

More precise targeting during the second containment

In terms of strategy, the government clearly made a change in the fall of 2020, at the time of the second confinement. While the first announcements benefited a large number of companies, the executive targeted the sectors most affected at the time of the second wave.

“Since the start of the crisis, the hotel and catering industry has thus received, in public aid, the equivalent of 45% of the sector’s pre-crisis annual added value”, say the researchers.

Unlike the long-term measures of the Macron five-year term, the emergency measures have mainly benefited smaller businesses and less productive sectors.

It must be said that the government has regularly modified its criteria for the allocation of aid in an attempt to limit the windfall effects sometimes criticized by economists. One of the fears of IPP and Cepremap researchers a year ago was that the emergency measures and the stimulus plan would miss their mark.

Macron’s stimulus package could miss its target