Pascal Saint-Amans, economist, former director of the OECD Tax Policy Center, has been appointed member of the brand new Fraud Evaluation Council set up by Bercy. He is the eco guest of Franceinfo Tuesday October 10, 2023.
Tuesday October 10, at a time when the National Assembly begins to examine the State budget in committee, where every euro counts, the Ministry of the Economy is looking into the fraud and trying to evaluate it.
franceinfo: Pascal Saint-Amans, you are an economist; until a few months ago, you headed the OECD tax policy center. Bercy has therefore today set up a Fraud Evaluation Council, in which you participate. Social fraud, tax fraud, which needs to be evaluated and quantified. We therefore have no idea how much fraud costs the state coffers, it seems incredible…
Pascal Saint-Amans: Yes, it seems incredible and at the same time, it’s logical because fraud is what we don’t know about. How can we accurately assess what we don’t know? So we have a real challenge.
“We know there is fraud, but we don’t know how to put an amount on it.”
Pascal Saint-Amansat franceinfo
Several countries are making attempts, but this requires defining what fraud is. There is money that is not coming in, because there are people who intentionally do not pay their taxes. You also have people who make unintentional mistakes. It’s not fraud but the tax doesn’t come in either. And you have holes in the legislation. We think that money should come in for businesses. But in fact, there are holes, tax loopholes, and therefore we can say that these tax loopholes should be filled. Is this fraud? Neither. So in this aggregate, there are different elements that must be distinguished. This is quite a complicated task and the French government has decided to tackle this work.
You will therefore define fraud and then evaluate it. You say that this is not a French problem, ultimately all countries find themselves facing the same situation?
All countries face fraud and seek to put a number on it. Several countries do it: the United States, the United Kingdom, Italy too, for example. There are not very many of them and this figure, in fact, covers a little bit of all the different categories that I have indicated. But France intends to try to quantify more precisely what really constitutes fraud, that is to say the intention not to pay taxes.
The tax union Solidaires public finances estimates fraud between 80 and 100 billion euros per year. Does this astronomical figure seem plausible, or is it too early to answer?
We can throw out a number, but in fact we don’t know. The objective of this observatory, of this council, is to try to come up with somewhat rational methods which overlap with macroeconomic approaches. We look at the country’s major economic aggregates, we make hypotheses, we say to ourselves “it must be around this amount”, for VAT, for example…
What costs the state the most? Is it fraud practiced by companies, by individuals? Do we know?
The first thing we know is how much the different taxes bring in. The tax that brings in the most in France today is VAT. So it is the one that is most likely to give rise to fraud and loss of earnings. The shortfall for VAT, several studies are rather convergent, would be between 20 and 25 billion euros per year. This is an order of magnitude that is found in numerous studies, but which overlaps with different realities. You have schemes called “VAT carousels”.
“You invoice between Luxembourg, Italy, France… And then the VAT evaporates. That’s organized fraud, it’s crime, it costs billions. We have a lot fought against it, there are a few left.”
Pascal Saint-Amansat franceinfo
And then you have another VAT fraud, when we say to ourselves “I don’t declare a transaction, I pay my plumber under the counter with cash without declaring”. So you have all these volumes, in addition to income tax, corporate tax and social security contributions. The observatory focuses on both tax fraud and social fraud. Social frauds are perhaps less in terms of volume, but they are more shocking for people, because they relate more to inequalities.
Do you think that fraud must be assessed so that there is support for the tax, consent to the tax?
Quite. Putting a number is not of much interest in itself. What matters is identifying what fraud is to better combat it and reduce it. Because when there is fraud, in fact, it is those who are honest who pay for others.
“Reducing fraud means increasing tax equality and tax justice.”
Pascal Saint-Amansat franceinfo
Things have been put in place, in particular to combat tax evasion. Today there is a sort of sobering up unit in Bercy, for the repentant, there is also the automatic exchange of banking data. Does all this help to curb tax evasion?
Absolutely, it has not yet completely penetrated the population, but in 2008, with the global financial crisis, the G20, the largest countries in the world, with the OECD of which I was in charge at the time, put an end to banking secrecy.
“There is no longer any banking secrecy in Switzerland, the Caymans, the Bahamas and other countries.”
Pascal Saint-Amansat franceinfo
The rich can no longer hide their money in bank accounts abroad and not declare their income. Today, this income is declared, either by the people themselves, or by the tax administrations of other countries. Last year, Switzerland sent more than 3 million bank accounts to 90 partners. France undoubtedly received hundreds of thousands of bank accounts. So we now have a sort of flashlight to illuminate an area that was completely dark, where we didn’t know what was happening. If things are better in that area, we have to quantify it and that is one of the tasks we want to tackle in this group.
When you were at the head of tax policy at the OECD, you were one of the architects of the establishment of a global minimum tax of 15% on multinationals. What is the reality of this tax today?
“On January 1, 2024, all multinationals worldwide will be subject to a minimum tax of 15% on their income.”
Pascal Saint-Amansat franceinfo
In France, they pay more. But when French companies put profits in tax havens taxed at less than 15%, France did not recover the difference. Tomorrow, on January 1, 2024, France will make up the difference.
But the United States is not going to apply this 15% tax?
This is why we designed this global minimum tax in a slightly diabolical way. Even if countries as large as the United States or China have not ratified this tax and will not apply it at home, this will not be the case for American or Chinese companies located in countries that do so. apply. All European countries will apply it, as well as the United Kingdom, Canada, Japan, the G7 countries – apart from the United States – and a large number of developing countries. So, there will be a minimum tax of 15% on multinationals from January 1, 2024.