GENEVA, SWITZERLAND / OPINION – It turns out that while France likes to collect taxes, it doesn’t like to pay them itself – and who can blame them?
Nevertheless, in the interest of neighbourly relations, France will have to start coughing up some cash for Switzerland: eight cantons are now waiting, hands out, for France to settle its tax bills with them, some CHF300 million, with about one-third of that owed to canton Vaud. The payments were due 30 June. They are collected by Bern and redistributed. Bern says it isn’t worried: the French administration just moves more slowly.
The taxes are collected by France from its residents who are frontaliers, or cross-border workers who are not taxed at source in Switzerland. RTS reports that some communes in Switzerland now rely for up to one-third of their revenues from these workers, and France’s slowness in paying what is owed (details are covered by bilateral agreements) is causing local Swiss budget problems.
France paid the bills on time in 2014, but in 2013 it paid six months late.
The French government announced in July that it collected more than euros 19 billion in undeclared income in 2014, plus more than 4 billion in related fines. Its tax revenues in general were up. Income tax and social taxes paid by workers rose, contributing to that.
Look at the OECD chart of roughly what it costs an employer to pay a worker, more precisely the “tax wedge between total labour costs to the employer and the corresponding net take-home pay for average single workers without children in OECD countries”, and France is in the top five each time. Ditto for couples with two children.
The Economist wondered aloud in 2013 why the French tolerate such high taxes. Part of the answer, it argued:
” … the French are the first to defend a way of life subsidised by the public purse that can often only be bought privately in Britain or America. Moreover, the French make a firm distinction between taxes and social-insurance contributions. Only half of households have to pay income tax, but everybody pays social charges. If the French pay so much, goes the line, it is because of the insurance principle: generous unemployment benefits, for instance, are not a gesture of largesse by the French state but an insurance entitlement. Indeed, the longstanding tolerance for taxes has underpinned the solidity of French sovereign debt, since it is a fair bet that France’s government can efficiently collect the taxes it needs.”
France’s employers are paying a lot, its employees are paying a lot, revenues are up – but the country is a laggard itself when it comes to settling its tax bills.
Maybe some of those revenues from frontalier workers should be used to build some efficiency into the system.
Additional reading, Fr, Bilan 2013