Taxing insurance companies and banks to get more tax revenue is the idea of Giorgia Meloni in Italy. In its draft budget for 2025, presented Tuesday October 15, the transalpine government decides to make bankers and insurers contribute by freezing some of their tax credits in order to provide liquidity to the Italian state. Expected tax revenue “are greater than 3.5 billions of euros”according to the Minister of Economy, Giancarlo Giogetti who speaks “of a sacrifice”.
Italy is seeking to make 25 billion euros in savings. And the country is, like France, targeted by an excessive deficit procedure launched by Brussels during the summer. In France, the 2025 finance bill, which provides for an effort of 60 billion euros, is beginning to be examined in Parliament. Michel Barnier’s government plans to ask the biggest companies to make efforts to replenish the deficit. In particular, he proposes to temporarily increase corporate tax for the 400 companies with more than a billion euros in turnover. Is a contribution from insurance companies and banks as in Italy possible? Elements of response with Clément Carbonnier, professor of economics at the University of Paris 8 and co-director of research on socio-fiscal policies at Sciences Po Paris.
1 Is this Italian initiative a good idea?
The economist says to himself “fairly circumspect about specific taxes”. For Clément Carbonnier, who also mentions this tax on dogs which exists in Germany, “there is a bit of this idea that we are going to innovate and invent taxes because we are looking for money”. He assures that there are other means already existing, such as corporate tax, the possibilities today offered by the OECD to put in place taxes on multinationals. “It’s not necessarily a good idea to multiply ‘small taxes'”, he assures because this can lead to several risks. The one to have “taxes not really under control”to add “tax complexity” which already exists, and to create “forms of inequity” if special tax residues persist over time.
2 Do tools already exist in France to tax banks and insurance companies?
Clément Carbonnier recalls the existence of the “salary tax” at the European level, and therefore in France. This tax applies to sectors which are not subject to VAT and particularly to banking and insurance. “These sectors do not pay VAT because given their activity, we cannot really calculate VAT, explains the economics professor. So these companies, instead of paying VAT, will pay a tax in place of VAT called ‘salary tax’. And the calculation of this tax is based on a rate applied to their payroll.”
This rate stands at 13.6% for salaries of 15,800 euros per year, which is below the minimum wage. “A rate lower than VAT”underlines Clément Carbonnier. He recalls that a higher bracket previously existed, its rate was 20% for salaries above 150,000 euros. But this tranche was deleted in 2018 at the start of Emmanuel Macron’s first five-year term. “It was after Brexit and to attract high salaries from the City”explains the economist.
3 What tax levers does France have today?
For Clément Carbonnier, if we want to make greater contributions to French banks and insurance companies, “we are not obliged to create new taxes”. “We can, for example, increase the rates of this tax on salaries. We can also recreate what existed, that is to say this upper bracket which, in fact, affects the very very high salaries of a certain number of sectors not subject to VAT and therefore in practice, the financial sector.”
The economics professor also recalls the existence of the financial transactions tax, created in 2012 under Nicolas Sarkozy. It levies 0.3% on the purchase of shares of companies with their head office in France. But it can be reviewed, as the Court of Auditors had already requested in 2017. More recently, during the early legislative elections, several NGOs, including Oxfam, also advocated for expanding this tax on financial transactions and making it more effective.
With these two tools, “There’s no point in increasing taxes at first.” concludes Clément Carbonnier. What solution will ultimately be chosen? Response begins on October 29, the date on which the National Assembly will vote on the first part of the finance bill for 2025, which will notably concern tax increases. The final vote on the bill in the Assembly will take place on November 19.
