A study puts the annual increase in purchasing power at “13 euros per household”

Asterès quantifies the annual impact of Marine Le Pen’s proposal and stresses that VAT is not the right tool to “defend purchasing power”.

In the middle of the election campaign, the rise in inflation inspires the two presidential finalists, who propose numerous measures to protect the purchasing power of households – with varying degrees of effectiveness. In a study published on Wednesday, the Asterès company addresses the implications of Marine Le Pen’s proposal to reduce VAT to zero on a basket of basic necessities.

The conclusion is clear: “little gain in purchasing powerare to be expected from this measure, thedoesn’t seem like the ideal solution“. Beyond the legal feasibility of this route, the company notes that eliminating VAT on bread, cereals, milk, cheese, eggs, oils, fats, fruit and vegetables would theoretically result in a gain of “133 euros» for French households, «ie a purchasing power increase of 0.3%“. However, part of this decline would be absorbed by the operators of the chains, the study specifies: ultimately only 10% of the decline would benefit the households directly, which corresponds to an increase in purchasing power for households of 13 euros per year. “ie 0.03% per household“.

SEE ALSO – “Inflation out of control, VAT reduction, TICPE…”: Marine Le Pen explains her purchasing power measures

In detail, the profit for the poorest 10% of households would be 9 euros per year and for the richest 10% would rise to 19 euros, specifies Asterès. Either a windouble that for wealthy householdsin value and three times higher – 0.07% versus 0.02% – in percentage for poor households. The ratio between the costs of the measure and its consequences seems to be unfavorable: the abolition of VAT would result in a resource loss of approx3.8 billion euros“A significant sum for the state that could be used elsewhere, the law firm argues. “If this sum were paid directly to the 10% of the poorest households, there would be a purchasing power gain of more than 10% for these households‘ he calculates.

The disappointing precedent of the restoration

For Marine Le Pen, removing VAT on a basket of basic needs – the contours of which are still unclear – would help the poorest households in the face of inflation. His teams estimate the cost of this proposal at 3.5 to 4 billion euros. But the executive rejects this approach, which it has described as unfair and ineffective.also very expensive“. Not very targeted, it would benefit everyone, including those who don’t need it, and would have little effect on those most at risk, government spokesman Gabriel Attal assured on Thursday, rather than defending concrete aid.

VAT cuts have historically had only a limited impact on consumer purchasing power. The most convincing example comes from the catering trade: the tax change from 19.6% to 5.5% in July 2009 was not reflected on the bills. “Thirty months after the VAT cut, prices are down just 1.9% […]. The reform primarily benefited restaurant owners, who pocketed around 56% of the tax cut“, two economists from the IPP stated in a study in 2018.

A 2015 Compulsory Taxes Council report also emphasized that the gains were much more massive for wealthy households, logically more willing to go out to a restaurant: “for all goods and services taxed at reduced rates, the total benefit averages €720 for a first decile household versus €2,015 for a tenth decile household‘ we read in the document. Elements that lead to the assumption that VAT is not an appropriate redistributive tool, the authors argue.

SEE ALSO – “Marine Le Pen’s program is the secured downgrading of France,” says Jean Castex

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