Subscription 790/year or 190/quarter

Yellow vests, taxes and black money

Is President Macron the reason why the yellow vest has taken to the streets of Paris, or are the people wearing yellow vests just generally thoroughly bored by a guardian French state?


Now, the president scolds a teenager who calls him "Manu" rather than "Monsieur le President," and shows little understanding for those who are "left behind." And he removed the wealth tax (the "solidarity tax"). But is this what has triggered the protests? Or is there something else that smells like hundreds of thousands taking to the streets, some rolling over and burning cars, smashing shop windows and blocking roads? After all, they have received support from the entire 75 percent of the population.

The yellow vest is not organized by any leadership or party / organization from above. The reaction comes from grassroots via social media – almost like an anarchic organization of different groups in the population. But the question is whether the demonstrations will lead to radical improvements.

Living on borrowed money

When Macron took over last year with optimism, unfortunately his socialist predecessor Hollande had increased foreign debt from around 50 to 100 percent of gross domestic product – to around 20 billion kroner. When you distribute more than two oil funds – and live on borrowed money – you live beyond your means. Macron's reforms should therefore rather be a help to self-help – with more education and release of funds for investments rather than increased distributions. He implemented liberal reforms to create growth and prosperity. But that the richer sections of the population – without wealth tax and with lower corporate and dividend taxes – should automatically create greater growth was not an ambition that could be fulfilled, as Dagens Næringsliv also described it recently.

"I'm not an idiot then," the Chinese taxi driver told the Economist Journalist on whether he had ever paid taxes.

And when Macron's government now raises the minimum wage by 100 euros, eases the terms for minimum pensioners and removes taxes on bonuses and overtime, the contract with the EU bursts. There is the requirement that the government deficit must be less than 3 per cent of GDP. This will only increase government debt.

But what was Macron's government really trying to do for the labor market? The working life reforms have resulted in a 10 per cent increase in the number of long-term employment contracts. When the government regulated the legislation and removed the possibility for employees to receive sky-high compensation, employers ventured into more permanent employment. Furthermore, there are now stricter requirements that the unemployed must accept new job offers. The government is investing significantly in getting people into internships – the support of NOK 320 billion annually for vocational measures is now increasing by 10 percent. But lowering unemployment, which has been at 40 percent for almost 10 years, will take time. Still: 338 new jobs were created in France last year.

China as an example

On the other hand, why this trust in the state to sort things out for the most part? In China, unemployment is only 4 percent. But at the same time, the majority will not pay income tax. According to The Economist, the Chinese Ministry of Finance has estimated that there are 187 million potential taxpayers – of which surprisingly only 28 million pay their taxes (2015). China is now actually trying to increase the lower Chinese tax exemption from 4500 to 6500 kroner a month – possibly a third of a normal wage. In this way, they "give away" NOK 400 billion. Their labor reform is motivated by the possibility of introducing stricter controls – with the desired consequence that more than twice as many will pay taxes. Nevertheless, this will only correspond to 5 percent of the population. The rest will still live and work in a black or unofficial economy: "I'm not an idiot," the taxi driver told the Economist journalist when asked if he had ever paid taxes. And when employers have to pay up to 40 percent extra for employees' insurance and social expenses, many choose to operate in a black economy.

Therefore, income tax in China covers only 8 percent of government revenue – well below the average of 24 percent in OECD countries, such as in France. In France, twice as much government revenue is derived from consumption taxes (VAT) and other taxes. The "green" tax Macron would now introduce on fuel – which initiated the uprising from the yellow vests – is thus twice as important a revenue area for the tax base.

"Global" tax in 2019?

While the Chinese avoid paying taxes, often because they do not like the way the state spends tax revenues, the yellow vests have a louder reaction – directed at the state. In China, from 2019 you can at least get a tax deduction for studies, elderly care and housing costs, but the French can only reduce the tax to "parties and organizations, domestic workers, housing investments and energy saving", according to Le Monde diplomatique in December. That is, more of a relief for the better off
- than rural toilers and others at the bottom of the ladder.

And why should a global western company like Google be able to evade over 30 billion kroner from normal taxation? Digital giants today get away with an average of 10 percent income tax (by, for example, "moving" to Ireland) – while it should normally be 23 percent.

My point here in leadership is to promote a desire for more global proportional tax systems via the EU or the UN. Global taxes for businesses and employees may be inspired by federal systems from the United States or Canada, as recommended in Le Monde diplomatique. Let us see for ourselves – is it not naive in terms of value – that future solutions become more globally responsible bodies that really manage to provide for energy associations, environmental rules, a less enemy-building military apparatus, less corruption, and not least international tax rules and minimum wages?

And in line with anarchist or social liberal ideas, it is just as important to have one local anchoring for the good of the community. Here in the West, we should be able to imagine civil society that organizes itself more on its own in municipalities of around 20-30 inhabitants – if not necessarily with a black local economy as in China. This is a Marxist communism, where one does not so easily evade local, charitable contributions or local taxes to the community. Visible, the rich will be more easily ashamed, and the poor will be able to get help. Possibly we again would also see more responsible local entrepreneurs building the local community around the workers, rather than distant presidents without an eye for those who are "left behind".

Is this where it smolders for the yellow vests? Would one rather than guardian states rather accept one glocal tax, a combination of local and global – where the individual is given a greater opportunity to decide locally, as well as see that the most necessary regulations are administered internationally?

Welcome to 2019!

Truls Lie
Truls Liehttp: /
Editor-in-chief in MODERN TIMES. See previous articles by Lie i Le Monde diplomatique (2003–2013) and Morgenbladet (1993-2003) See also part video work by Lie here.

You may also like