FRENCH budget minister Bernard Cazeneuve said yesterday that weak economic growth was causing a €5.5bn (£4.6bn) shortfall in 2013 tax receipts.
“According to our calculations there is a €1bn shortfall on value-added taxes and a €4bn shortfall on corporate taxes, which are particularly sensitive to the economic cycle,” Cazeneuve said on BFM Television.
He added income tax revenue also fell €500m short of estimates, but as income tax revenues are based on 2012 incomes, he said his ministry was not yet sure what was behind this shortfall.
Cazeneuve also said the French treasury was continuing its fight against tax evasion and is aiming to recuperate €2bn worth of revenues from tax fraud in 2014, half from individuals and half from companies.
The gloomy economic news comes just days after the bitter blow that France’s economy had contracted in the third quarter as investment dropped.
The €2 trillion economy shrank 0.1 per cent in the quarter, slowing sharply from growth of 0.5 per cent in the previous three months, the INSEE statistics agency said last week.
The preliminary reading fell short of expectations for slight growth of 0.1 per cent, based on a poll of 22 economists.
Economic activity was widely expected to slow after the economy surged out of a shallow recession in the second quarter because of one-off factors like exceptionally high electricity production brought on by particularly cold weather.
But the latest shortfalls will not help improve President Hollande’s popularity, which is currently at a record low.
His government faces growing concerns about its ability to revive growth, with Standard & Poor’s cutting the country’s sovereign rating recently to AA from AA+.