woensdag 4 juli 2012

France's 7.2 billion euro tax is a non-event

France just raised taxes on the rich and is trying to get 7.2 billion euro in tax revenue in 2012 and 33 billion euro in 2013.

So what does this mean to the deficit of France? France's GDP is 2.56 trillion euro. France's debt is 90% of GDP. Its total debt is therefore 2.3 trillion euro.

What is 7.2 billion on 2.3 trillion euro? It's 0.3%. So it basically does nothing to the French debt.

You could argue that it is a first step to decrease the yearly deficit. But the deficit is currently 70 billion euro/annum. So we have a 10% decrease in the deficit, which is a non-event. It's like an obese person trying to lose weight by eating a smaller hamburger with less french fries. He is still gaining weight, but at a slower pace...

For 2013 it is estimated that France will have a 50% decrease in deficit, but France will still have a deficit.

And I believe France won't be able to wait till 2014 to decrease the deficit, because Europe would be in much worse shape than today.

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