Will your local taxes increase because of the state deficit?

Local governments fear they will be asked to fill the state budget deficit. This could mean a reduction in expenditure and the quality of public services or an increase in local taxes.

Local authorities will have to contribute to the “recovery of public accounts”, Bruno Le Maire, Minister of Economy and Finance, said on March 6, presenting to parliamentarians his options for reducing the public deficit. These comments sparked outrage among territorial officials. “We know the rules of the game: when the state has budgetary problems, it shifts part of the necessary efforts to the local authorities,” summarizes Jean-Marc Vayssouze-Faure, president of the Association of Mayors of France (AMF). ) from Occitania together.

“Communities have no right to shortages”

He recalls that “communities, unlike the state, are not entitled to shortages. Income must exceed expenditure. It is not up to us, who are doing well, to be the adjustment variable of a state that is managing poorly. That would be true.” are particularly unfair,” says the representative of the Occitan mayors. Especially because, paradoxically, local governments contribute to reducing the government deficit. After all, they presented a surplus on the balance sheet of 4.8 billion euros in 2022, and that in 2023 should also be positive. As for the debt that the municipalities, departments and regions themselves repay, it represents only 10% of that of the State.

Community involvement can take different forms. “It could be a reduction in investment support, which would harm the economy and development, since 70% of investment expenditure is made by local authorities,” says Jean-Marc Vayssouze-Faure. Savings can also be achieved by reducing overall operational allocations to communities. “The state has already done this to us, we know that,” recalls Sacha Briand, responsible for the finances of the Toulouse metropolis. Since 2014, the cumulative decrease in this allocation, in constant euros, would represent an effort of 70 billion euros.

“Always focus on the same people”

The elected official from Toulouse adds that “the state has already reformed the taxation of local authorities, in particular that on the contribution to the added value of companies. Without compensating this to the nearest euro, as he had nevertheless announced. if it deprives us of our resources and at the same time asks us to make less use of loans, we have only two solutions: either reduce our expenditures or increase tax revenues. However, reducing expenditure is not possible in the eyes of the president of AMF Occitanie. “How can we do this without affecting services to the public? We can always have less staff in our schools, less road maintenance, less municipal police officers… It’s possible but not desirable.” Fiscal leverage therefore seems to be the only solution.

Since the abolition of the residential tax and the CVAE, property tax has become the most important instrument available to local authorities in this area. “This is our only room for maneuver, which means we must always focus our efforts on the same people, i.e. the property owners.” That is why Jean-Marc Vayssouze-Faure calls for “a local tax that is fairer and paid by everyone. It would also be a way to empower citizens, to create a link between the user and local public services.”

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