Who said forecasting was an exact art? Certainly not the experts from the Ministry of the Economy and Finance, whose recent calculations around corporate tax revealed a major surprise: a small gap of 40 billion euros. Don't panic, it's just the budget of several small nations that has evaporated in Bercy's calculations. A quick overview of this tax “quake”.
When the calculations take on water
Imagine, you are in government, and every fall, it's the same ritual: revising the corporate tax forecast downwards. Since 2005, the average rate of this joyful correction has been 9%. Laurent Bach, economist at the Public Policy Institute, responds to Echos to the question: does this mean that the government is showing voluntary excessive optimism in drawing up its budget? “ No, writes Laurent Bach, because over this same period, IS revenues were higher than forecasts more than one year out of three “. Apparently, forecasting accurately is not really Bercy's strong suit, especially for corporate tax, this tax which only represents 5% of revenue but constitutes a third of forecast errors. A real talent for controlled skidding.
It seems that optimism is the key word when drawing up the budget. However, the awkwardness outweighs the malice. Errors are common and the tax administration makes mistakes more often than not. This recurrence of error, however, does not discourage our dedicated civil servants, who each year repeat the exercise with the same optimistic fervor.
Business accounting tips
When the economy sneezes, businesses sneeze, and corporate taxes pay the price. This fragile barometer, which reacts more violently than GDP to economic vagaries, sees its revenues decline more brutally than growth. Laurent Bach underlines this phenomenon while pointing out another culprit: the installment system. Companies can adjust their corporate tax (IS) installments downward in anticipation of a reduction in their profits, or hoping for a future improvement in their financial situation, to temporarily alleviate their tax burden in times of difficulty. A real tax game where companies, anticipating bad days, adjust their payments.
But the icing on the cake is this residual error of 14.5 billion euros. Indeed, the drop in corporate tax (IS) revenue reaches 14.5 billion euros in 2024, an amount much higher than the 8.8 billion expected. The explanation? A subtle but significant change in corporate IS payment behavior. The latter juggle with installments to better dilute difficult periods.
Avenues for reform
Bercy, far from resigning itself to an accounting fatality, could well tighten the bolts. By targeting companies with strong cash flow for more immediate IS payment, the State could reduce this “financial risk sharing”. In addition, the exploitation of new sources of information, such as VAT statements or future electronic invoicing, could refine these optimistic forecasts. Improvement is not only possible, but necessary. Perhaps this is the time for Bercy to seize this opportunity.
With this analysis, we better understand the dimension of the error and, above all, the levers on which it is possible to act to prevent history from repeating itself. Ultimately, it is an invitation to more rigorous and transparent management of public finances, in a context where every euro counts.
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