In the end, making an economic policy is nothing more than creating incentives to push companies and households to go in the direction that is considered best. It looks simple. It is not. In our mode of government, and we will see it again in this issue, which devotes considerable space to the tax reform project, we often trip over contradictory incentives. One party of government pushes its measure to flatter its electorate, another pushes an opposite measure to flatter its own. Result: the State spends a lot, taxation becomes chaotic and this tax web is often counterproductive.
…
In the end, making an economic policy is nothing more than creating incentives to push companies and households to go in the direction that is considered best. It looks simple. It is not. In our mode of government, and we will see it again in this issue, which devotes considerable space to the tax reform project, we often trip over contradictory incentives. One party of government pushes its measure to flatter its electorate, another pushes an opposite measure to flatter its own. Result: the State spends a lot, taxation becomes chaotic and this tax web is often counterproductive. We risk being disappointed again if, as we are planning here, we soon raise a tax on the excess profits of companies, and more specifically of energy groups. Clarification: it is not a question here of raising the corporate tax rate, but of temporarily taxing profits on activities carried out in the country that the authorities consider “too high”. Italy, Spain and the United Kingdom have already taken action. Initially, there are two observations. The first is moral. It is indecent that in times of crisis, some companies see their profits soar. The other is ringing and stumbling. Money must be found to adopt support measures for voters panicked by the idea of seeing their energy bills double or triple. But first, what is a superprofit? If it is a benefit received unduly, because a cartel has been set up, fraud has been committed, or such and such legislation has not been respected, the State already has the means to order and fine the culprits. But what if the increase in profits is explained because the company has become more efficient, or because external events such as a war, sanctions, a virus,… have unbalanced the market? And against what normal level should these excess profits be defined? And then, do we really believe that such a tax would bring in the necessary money? The corporate tax yield is between 15 and 20 billion euros per year, or at best a sixth of its total tax revenue. A tax on the excess profits of energy groups would therefore provide at best a few hundred million. Will it help households get through the difficult 5 or 10 years predicted by the Prime Minister? Not to mention the risk of the boomerang effect. Remember the banks. In 2008, the State saved them and then imposed new taxes on them. But in the end, the banks, encouraged by the regulators to maintain a certain level of profitability, passed on these measures to their customers by raising their prices… Finally, at a time of energy transition, such a measure would offer the most bad incentive ever. Because if we raise a tax this year to finance (cosmetic) aid for households, businesses, scalded, will no longer be too tempted to invest in the years to come. What good is it, since the profits on these investments would risk being captured by the State… It is all the more delicate since the government is precisely negotiating with Engie to ask it to invest very large sums in the extension of our nuclear power plants. We may want to direct corporate profits so that they finance carbon-free production methods. It would be wise. But levying a tax on excess profits to fund a check for households is neither timely nor effective and would send a disastrous message to an economic world that already feels fairly abandoned today.
.