Taxation of super profits: the debate is far from over by Vincent Drezet

The hour of the debate on super profits rings endlessly. After the tragicomedy of late summer that saw a government deny its existence and turn a deaf ear to those who thought it right and necessary to tax them above the normal rate of corporation tax, history will have, so, seated. Super profits exist and it is possible to tax them. The debate carried out in the framework of a flash mission of the National Assembly and the system of the European Union bear witness to this.

This consists, on the one hand, in establishing a tax of 33.3% on profits higher than 1.2 times the average profits of previous years and, on the other hand, limit the income of energy supply companies to 180 euros/megawatt hour. The States had every opportunity to improve and complement it.

This was not the choice of the government, which concentrateda stricto-sensu declension of this device. He expects between 5,000 and 7,000 million euros, of which only 200 million for the tax itself, while a tax on all super profits could bring in between 10,000 and 20,000 million euros, as the Ecological and Social Alliance (formed by the CGT , the Trade Union). Solidaires, the FSU, Attac, Oxfam, Greenpeace, France environment…) have shown it.

Future announcements of large group profits in 2022 will help reignite the debate.

This debate will undoubtedly come back with a vengeance for several reasons.

Future profit announcements made by large groups in 2022 will contribute to this. Its quarterly results profile a new wave of super profits. The energy sector is not the only one affected: luxury goods and banks are on the rise… budget trajectory of the government will also have to be taken into account. State spending will fall by 2.6% in 2023 compared to 2022. Far from allowing to face the challenges of the period, it will also be financed with a fiscal system that has experienced and will continue to experience profound changes.

The fiscal balance of recent years remained an essential element of the fiscal debate. The single flat-rate tax and the transformation of the joint and several property tax into a property tax have proven to be costly, unfair and ineffective measures : France Strategy’s capital tax reform evaluation committee has shown that these measures have encouraged large dividend distributions more than investments, while their gain has been heavily concentrated in households rich

The government’s options weigh, more than before, the tax burden on households through the payment of indirect taxes, the most unjust in nature.

The reduction of the nominal corporate tax rate from 33.3% to 25% in 2022 was accompanied by a transformation of the tax deduction on labor competitiveness into a bonus for social security contributions, with an initial assessment also prepared by the France Lean strategy.

This did not prevent the government from lowering local business taxes to end up abolishing the contribution to business value added (CVAE), a measure that will mainly benefit 10,000 largest companiesthat is to say, those who have already captured 66% of the gains from the 50% reduction in CVAE.

Small businesses do not pay this tax, so they will not benefit from its elimination. Added to the abolition of the housing tax (which will not have benefited the 15% of the poorest, exempt households), this measure also puts the finances of local bodies in the hands of the State.

This fiscal orientation produces several effects. The fiscal pressure on households, especially the middle classes and the poorest, is heavier than before, through the payment of indirect taxes, the most unjust in nature. It offers room for maneuver to large companies to distribute more dividends.

Finally, it makes it impossible to satisfy social, ecological and economic needs, with the obvious risk of seeing how the market sector takes over needs of general interest and public action.

In this context, pension reform can only increase the sense of injustice.

In this context, pension reform, designed as a means of reducing public expenditure by reducing the proportion of pensions in GDP (which, in the demographic context, would lead to a fall in the average amount of pensions ), can’t just add to feeling of injustice.

The government is preparing to foot the hefty bill forunconditional help companies, from the tariff shield and more broadly from public policy funding to a population whose purchasing power and rights, and therefore ultimately their standard of living, will necessarily continue to deteriorate.

Because their choices contribute to unbalancing the distribution of wealth a little more, to feed those fed up with fiscal and social injustices and to undermine consent to the pillar tax of a democratic society. The legitimacy of the debate it is reinforced on the taxation of super profits and, beyond that, on the need to initiate a tax reform aimed at fiscal, social and ecological justice and strengthen the fight against tax evasion.

Vincent Drezet is a spokesperson for Attac France.