€70bn lost in tax exemptions

FRANCE offers too many tax discounts and exemptions - totalling €70billion a year - without finding a way of making up the lost revenue, the official public auditor has warned.

The Cour des Comptes said income tax relief schemes and initiatives such as the VAT drop from 19.6% to 5.5% in restaurants were worsening the country’s budget deficit.

Auditors also identified a range of schemes that wasted public money (see below).

The group’s annual report said over-spending across the public sector continued last year despite a €6bn drop in tax revenue. Tax income is expected to fall by at least another €2bn this year, excluding any eventual effect from scrapping the taxe professionnelle.

France’s budget deficit as a percentage of GDP has more than doubled in a year, from 3.4% to 7.9%. The report warns that national debt will equal the country’s GDP by 2013 if nothing is done.

Cour des Comptes interim president Alain Pichon - who was drafted in after the death of the group’s president Philippe Séguin in January - said the deficit could only be partly blamed on the economic crisis. Poor controls on state spending had made matters worse.

The government has pledged to keep public spending growth to about 0.6% this year, compared with 2% in 2009.

Other finding

Private use of police cars
Unmarked police cars are being used for personal journeys - 31 of them by people with no connection to the police, including a former president, two ex-prime ministers and former ministers.

Tax inspectors pick easy cases, not serious ones
Major tax fraud is not being investigated thoroughly because it takes too long. Inspectors choose quick, easy cases involving individual tax evaders to hit their targets.

Unemployment benefit
The report says €800m a year is being fraudulently claimed. A similar amount is being withheld by employers who fail to declare staff and avoid paying contributions.

GPs' paperwork
Doctors filled out 150 million paper feuilles de soins (medical claim forms) last year, wasting €200m. The Assurance Maladie wants to fine doctors who do not switch to the cheaper electronic carte vitale system.