2023-10-24 17:13:07
The president of the Court of Auditors, Pierre Moscovici, speaks to the press after the publication of the annual financial report on the presidency budget in the premises of the Court of Auditors in Paris, February 16, 2022. STEPHANE DE SAKUTIN / AFP
Local authorities have been warning about the state of their finances for months. In a report made public on Tuesday October 24, the Court of Auditors shows that in fact, their accounting situation is in the process of turning around. While communities generated a surplus of 4.8 billion euros in 2022, they may have to spend more than they receive in 2023. This should result in a deficit of 2.6 billion euros in 2023, and 2.9 billion euros in 2024, according to the institution’s projections.
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The Court of Auditors prefers to speak of ” need funding “. But the reality of the degradation is no less obvious. Even if the situation of local authorities remains structurally better than those of the State and Social Security.
The financial jurisdiction has highlighted, in recent months, how municipalities, departments and regions have experienced “in 2022, as in 2021, a very favorable financial situation on an overall level”. Which had exasperated local elected officials. In 2023, on the other hand, write the magistrates, “the slowdown in economic activity is likely to limit the overall increase in revenues of local authorities, with certain significant revenues even experiencing a decrease in absolute value. Furthermore, inflation will continue to have significant direct and indirect consequences on their spending..
Fall in VAT yield
The recipes, first. The government anticipates a decline in economic growth, which would drop from 2.5% in 2022 to 1% in 2023. While it had increased in 2022, household consumption could decrease by 0.2% in 2023. This leads to mechanically that of the return on value added tax (VAT). However, this tax has become an important source of financing for local authorities since the government abolished the housing tax and the contribution on the added value of businesses (CVAE): it represents 17% of their revenue and even 54% for the regions.
Likewise, the downturn in the real estate market is already impacting the product of transfer taxes for valuable consideration (DMTO), the taxes paid during the sale of real estate, a large part of what we usually call “fees of notary”. It is mainly the departments, and to a lesser extent the municipalities, which affect them. Finally, the price of gasoline and lower energy consumption also affect the proceeds of the internal consumption tax on energy products (TICPE) from which the regions benefit.
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