Where is the administrative and tax ‘simplification shock’ announced by the government? By Bertrand Lacombe, Lawyer
The ‘simplification shock’ announced by President Hollande one evening in March 2013 was enthusiastically received. The formula was seductive, in the tradition of the ‘Grenelle’ and ‘Assises’. Expectations were high, in a country where administrative burdens, that ‘paper tax’, weigh in at €60 billion a year. Nearly three years after the announcement of this shock measure, taxpayers are not groggy.
A modest record in symbolic terms
From a symbolic point of view, the General Tax Code has hardly been slimmed down, and has even retained the picturesque numbering that so amazes law students. Between article 39 (which is 11 pages long) and article 40, there are no fewer than 56 articles currently in force! Another symbol: the number of taxes. And the statistics are harsh. The announced abolition of absurd taxes with low yields has not happened: 52 taxes were created in 2010 and 2015! Admittedly, we welcome the recent disappearance of the tax on table football – whose yield was negative – or the tax on pavements in certain communes. But these taxes have already been replaced by other taxes… Spread consumers had better watch out!
No revolution in terms of principles
In terms of principles, it is regrettable that the announced revolution whereby ‘silence from the administration for two months is tantamount to agreement’ only rarely applies in tax matters, where longer deadlines and numerous exceptions are provided for, justified because the request is of a financial nature (this is common in tax matters) or is assimilated to a complaint. Similarly, the abolition of retroactive taxation of measures adopted during the year, announced as a new principle, will in the end be no more than a political promise. Incidentally, neither the Conseil Constitutionnel nor the Conseil d’Etat have yet condemned this ‘little tax retroactivity’, a French curiosity that never fails to amaze our neighbours. How do you explain to an entrepreneur that he will learn at the end of December how the transactions he carried out in January will be taxed? And yet it is accepted that the predictability of the law is a component of legal certainty.
Corporate taxation: room for improvement
As far as company taxation is concerned, however, a number of efforts deserve praise: purely declaratory obligations that do not serve to determine the tax base but carry heavy fines have been eliminated … in part. This is the case with the ‘technical loss tracking statement’ and certain omissions, in some cases, on the so-called ‘single’ tax form. At the same time, however, new independent reporting obligations have been introduced, particularly in the area of transfer pricing. Worse still, nothing has been done to eliminate the phenomenon of ‘sedimentation’ of tax texts: to determine whether a financial charge is deductible, no less than five different and independent bodies of limitations have to be articulated! The Finance Acts passed at the end of December, which in the end have a fairly modest purpose, do little to make the tax rules more intelligible.
Households will wait
Households, on the other hand, will have to wait at least until the next five-year period for their income tax to be deducted at source. They would be ungrateful to complain about this, spoiled as they have been by the dozens of so-called technical measures (tax relief, tax scale, family allowance) adopted in recent months. So, despite the announced shock, taxpayers should be clear-headed enough to reflect on Cravan’s formula: simplification is not simplicity!
Bertrand Lacombe
Lawyer, lecturer in tax law.