France Tax Revenues €5.5 Billion Lower than Expected; Poll Shows 92% Do Not Believe Hollande’s Tax Promises

FranceTaxRevenues €5.5 BillionLowerthanExpected; PollShows 92% Do NotBelieveHollande’sTaxPromises

In spite of massive hikes in taxes on the wealthy and an increase in the VAT and other taxes revenue estimates missed their targets badly. Reader Lionel writes …

Hi Mish,

As you were expecting, France did not manage to get as much tax revenue as expected by the government. Total revenues were €5.5 billion less than expected, split as follow:

€500 million less in income tax
€1 billion less in VAT
€4 billion less in business tax (tax on business profits).

Moreover, if you compare it to the initial forecast, it’s €11 billion less than expected! And of course expenses have increased €3 billion.

It reminds me your past articles about Spain.


Let’s take a look at some of the links Lionel sent.


Via translation, BudgetMinisterAdmitsRevenueShortfallof €5.5 Billion

The Minister for the Budget Bernard Cazeneuve admitted Sunday that the revenue of the State in 2013 would be lower than expected, the order of € 5.5 billion, due to the poor economy, he said.

"According to our calculations, there is a shift to VAT of about one billion, and corporate tax of about four billion," said Cazeneuve.

The income tax shortfall was around 500 million euros.

SpendingUp €3.3 Billion

Translation from Le Figaro shows 3 billioninadditionalspendingfor 2013.

In these times of fiscal discontent and protests by Brussels, the expected improvement of public accounts in France in 2014 and 2015, the government had to be reassuring about the traditional collective fiscal year-end synopsis presented on Wednesday.

Forecasts deemed "plausible" by the High Council of Public Finance, however warned of "a significant gap" between the structural deficit in 2013 (excluding cyclical effects) to 2.6% of GDP, higher than the 1.6% estimate anticipated at the end of 2012.

Overspending give rise to 3.2 billion in new funding, including $ 2.1 billion for the general budget and the balance for the EU budget.

Five days after the downgrade of France by Standard & Poor’s, a ministerial meeting was called to control of public expenditure from 2015 to 2017. After an effort of 15 billion compared to the upward trend in spending in 2014, "the next year budget will extend this action," said Matignon. To target deficits of 3.6% of GDP in 2014 and 2.8% in 2015, without increasing the tax burden, government must cut expenses by 16 billion.

Brussels Does Not Believe Budget Promises

Unsurprisingly, Brussels does not believe the promises made by Hollande.

While Paris was planning to back below 3% in two years (2.9% to be exact), Brussels predicts it … 3.7%! Only slightly less than the year before.

The European Commission reasoning "constant policy" (that is to say without further corrective action), so she informed the French government has no chance of meeting its target back below 3% in 2015 without implementing further structural reforms.

French Do Not Believe Spending Cut Promises, Tax Promises, Growth Promises

Brussels does not believe Hollande, and neither do French citizens. Via translation from Le Fiagra, please consider Budget 2014: the French do not believe.

SURVEY The survey Way Opinion for Le Figaro Magazine are clear: the French want to reduce public spending, but do not believe in the government’s promises to do so.

In September, the economy minister, Pierre Moscovici , had referred to the "ras-le-bol tax" of French and Hollande himself had spoken of the need for a "tax break" in 2014. Wham, just two months later, came the environmental tax, taxes on saving products like ELP or PEA 15.5%, and a new tax on their gross operating profits of corporation.

These examples illustrate the discrepancy between government speech and deeds! So much so that today, the French do not trust their government. This is what emerges from the study conducted by Opinion for Le Figaro Magazine: 92% of French people do not trust the government to lower taxes, 82% do not believe government will lower spending and 80% do not believe growth targets!

Mike "Mish" Shedlock

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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