Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
the problem isn't really paying taxes, it's how the tax money is used. France has an apalling record in mismaning taxpayer money through archaic regulations. A country like Sweden has a higher tax pressure than France but a far better living standard for the poor and socially disabled, because the losses in administration are minimal. The best example is healthcare where about 50% goes to administration in France and 20% in Sweden.

The "taxes on the rich" is only a part of the tax debate since they amount to a very little part of the national wealth. Even of the rich were taxed to 90% it would improve the resoources of the state minimally. "Taking from the rich to give to the poor" sells politically but allows politicians from all tendencies not to cut into the pork or to do needed reforms. Because that would piss off the nomenclatura and imply that you might not be reelected.  

by oldfrog on Sun Feb 11th, 2007 at 01:17:41 PM EST
[ Parent ]
It's not only a question of taxes on the very rich, yet it's around these unhappy people that a great deal of media discourse revolves, which is what I wanted to point out. What matters is to maintain the genuine progressivity of taxes. But the upper rates of income tax have been lowered in France, and a 60%-of-income ceiling placed on annual tax paid. Sarkozy wants to take this anti-tax movement further. By the propaganda in favour of wealthy "victims", people are psychologically prepared to think that "it stands to reason" that things would work better if there were less taxation.

On the spending side, of course it's right to want efficiency. But the complaint that, in France, the State wastes huge sums of money is an old saw of the right. I heard Bayrou bring it out last week on TV. After saying he would make education a priority (good, I agree, and Bayrou is credible on education), he was asked how to pay for it. Reduce spending elsewhere, there's so much waste, he said. All that paperwork. Do you know you need an authorisation from the prefecture to hold a Vide-grenier? (Kind of car trunk sale).

He didn't get a follow-up question, more's the pity, on just how much he thought he would gain (to pay for major investment in education) by doing away with the prefectoral authorisation for Vide-greniers. The truth in all this is that the State would only save money by massively reducing public service jobs. That is something no candidate, Bayrou included, is going to promise. Especially as there is no guarantee of the private sector taking up the slack on the job market, nor any guarantee of greater public-service efficiency afterwards.

You've mentioned 50% administrative costs in French healthcare before, I think. Can you point us to a source for it?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Feb 11th, 2007 at 03:32:07 PM EST
[ Parent ]
Comparing public service in Sweden and France shows that you can have a similar level of quality (if not sometimes better) with less public service employees.
If Bayrou want to fire one third of the French "fonctionnaires", more a reason to vote for him. That means that we'll get to a normal average European level. Anyway it will happen because a large part of the civil servants working for the tax services, collecting TV-licenses etc won't be renewed when going into pension. The simple measure of prelecting tax to the source (France is the last Western Country not to have that system) will produce that and a the same time it will reduce "black jobs". This hasn't been implemented for 20 years for the simple reason that the powerful union at Bercy "didn't want to change its routines".

You don't need an authorisation to have a yard sale in France as a private person. It goes through normally an association (like a sport one, neighbourhood association etc...) which have a general authorisation. The problem is that the system is often misused by professional salesmen to evade tax. So I don't what Bayrou meant, but he probably didn't mean to finance efficiency with that measure. I suppose it was an example and a bad example. He could have taken "the formation professionelle" (mostly education given to unemployed) thet costs round 60 billions Euros yearly and has proven completely inefficient.

France has 2000 billions Euros in debt
The deficit of the trade balance is 30 million Euros
the state cannot longer collect enough money with taxes to provide the basic public services, next year it will have to borrow 20% of the expense.

the latest socialist response is to tax the French abroad ! I thought that DSK was more intelligent than that. One thing is sure, he lost about 250 000 votes.

Regarding the cost of the administration of healthcare in France I am pretty sure of my statement, I'll try to find a link soon.

Sweden had relatively the same problem than France 1995 and was nearly bought by Soros. They kicked about one third of their civil servants. It saved them.

by oldfrog on Sun Feb 11th, 2007 at 06:00:57 PM EST
[ Parent ]
repeating the mantra of Sarkozy et al, you know...

  • debt is not 2,000 billion, it's 1,200 billion. Each time, it has increased a lot more under rightwing governments than under socialist governments (like everywhere else). But still at 65% of GDP, it's not out of control. It's the same as in the US, where it's universally seen as a sign of "dynamism" and "trust in the future". Doubls standards

  • same thign with the trade deficit: does it reflect healthy consumption (and sharing of benefits) à la US or "healthy" "reforms" as in Germany where wages have stagnated for the last many years?

  • it's not the "formation professionelle" which cost 60 bn euros, it's the sum of all job creation or support schemes, 3 quarters of which are statutoty social charges exemptions. At most, you could play around with 7-9 bn euros. Not nothing, but not quite the same sum. And that's money wasted to corporations, somethign the right loves and encourages at all times

  • generally, the "we'll cut waste" promises are typical demagogery of the right, which somehow never goes around to fulfill them once in power (quite the opposite). Maybe we need 70 years of the socialists, like in Sweden, to have an ultra efficient State...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Feb 12th, 2007 at 01:40:27 AM EST
[ Parent ]
- sorry for the figure it's 1200, it was a typo. It's too much anyway. It was 21% in the late seventies. 77% of the French debt goes to pay the administration, 33% the Healthcare (Sécu). Sign of dynamism ?

Année Dette publique
en % du PIB Déficit public
en milliards d'euros Déficit public
en % du PIB Dette publique
en milliards d'euros

1978 21 % -4,5 -1,3 % 72,8
1979 21 % +0,3 +0,1 % 82,8
1980 20,8 % +0,7 +0,2 % 92,2
1981 22 % -10 -2 % 110,1
1982 25,3 % -14,4 -2,5 % 145,5
1985 30,3 % -21,4 -2,9 % 227,7
1986 30,9 % -25,2 -3,1 % 249,3
1990 35,3 % -24 -2,3 % 363,6
1992 39,8 % -48,8 -4,4 % 440,1
1994 48,9 % -63,1 -5,5 % 564,8
1995 55,1 % -65,5 -5,5 % 657,9
1996 57,6 % -49,8 -4,1 % 707,2
1997 58,5 % -37,8 -3 % 742,5
1998 58,7 % -34,6 -2,6 % 778
1999 58,2 % -23,6 -1,7 % 795,3
2000 56,7 % -21,1 -1,5 % 817,2
2001 56,3 % -23,2 -1,5 % 842,5
2002 58,2 % -48,8 -3,2 % 901,8
2003 62,4 % -66,6 -4,2 % 994,5
2004 64,4 % -60,6 -3,7 % 1069,2
2005 66,6 % -49,3 -2,9 % 1138,4
2006 (estimation) 64,6 % -42,6 -2,7 % 1152
the deficit has steadily increased under the Mitterand years and the Jospin years. No difference.

  • the trade deficit was historically high this year, when France was in excedent 4 years ago. Healthy "à la US" ? You must be kidding, why not invite Walmart and buy more chinese stuff ?

  • Formation professionelle :

see here it's at least 23 billions in "education that leads nowhere". I got the 60 billions from Jacques Marseille on a recent debate. But I might be wrong.

even if it isn't 60, we are NOT talking about subventions to enterprises.

- The pork in Sweden before its bankrupcy 1995 was cut by their first right wing government (Carl Bildt) in 50 years. It wasn't sufficient, the social-democrats
who won again 1996 had to fulfill the same policies. Remember that Sweden 1994 couldn't pay the interest rate on its debt any longer.

let me state something clearly : I don't defend the right here. I just try to see where the problems are. And it's obvious that France has an archaic administration compared to the Nordic countries. When I came back from Sweden 1999, I found myself proppelled back to the sixties arriving here... paper work, 36 different administrations doing the same thing... I couldn't believe my eyes...

For me the rethoric of those who more ore less defend this system (défense du service public mantra) is the same rethoric from the Swedish communists, not from social-democrats.

Both type of FRench governments tolerate a level of cheating and threats from unions, lobbies etc.. which would never been accepted in any Nordic country, Germany or even the UK. The mentality "somebody is going to make so I don't pay my parking fines" is everywhere...

Failing to say the reality is often fatal.

by oldfrog on Mon Feb 12th, 2007 at 03:40:45 AM EST
[ Parent ]
I personally agree with you that debt should be reduced and budgets more or less balanced (so that they can be used in downturns)

But look at when debt increased the most:

All Chirac/right wing governments.

Who stands a better chance of getting value for money from government? Those that value the output of government, or those that use it as an endless source of subsidies?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Feb 12th, 2007 at 04:01:12 AM EST
[ Parent ]
Bayrou was talking about improving education by massive investment. Do you really think it would have been intelligent of him to offer to finance it by cutting out vocational training (formation professionnelle)? That would really be robbing Peter to pay Paul, wouldn't it? (And, though, while being wrong about the cost, you may be right that vocational training could be better done, is it possible to totally do away with schemes for re-training the unemployed?)

Generally, it's often been remarked here on ET that it is easy to say: look, Sweden does this, Denmark does that, look at Finland! But much harder to show how systems that have evolved in small, tight, consensual economies like those can readily be transposed to a much bigger economy like the French (British, German, Italian). We should just kick out a third of public servants is the kind of reactionary panacea you can hear in any French town at the bar of the Café du Commerce. It's not a serious proposition.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 12th, 2007 at 02:20:24 AM EST
[ Parent ]
size doesn't matter. Percents do.
by oldfrog on Mon Feb 12th, 2007 at 03:41:58 AM EST
[ Parent ]
So you're assuming Sweden is the same as France is the same as Austria is the same as UK is the same as Denmark is the same as Spain is the same as Germany? No history, culture, specific conditions? No qualitative difference between small countries with a tighter national consensus and much larger ones with a greater spread of opinion?

Yes, percentages matter for purposes of comparison. But you can't evacuate the rest.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Feb 12th, 2007 at 04:28:41 AM EST
[ Parent ]


Occasional Series