Amidst the corona crisis, the central bank of France, Banque de France, stated that the health crisis will generate a 200 billion euro surplus in private savings by the end of 2021. The French government is considering a decrease in donation taxes in the hopes of increasing consumption. The French Green Party, EELV, considers this a blind attempt to fuel the economy which would ultimately lead to an increase in inequality. EELV proposes that this money should be used for an ecological transition and an opportunity to decrease social inequalities.
Greens against Government Idea
According to the Conseil d’Analyse Economique, between March 2020 and the end of 2021, 70% of the 200 billion euros were amassed by the top 20% richest households in France. This highlights how the global health crisis enabled an increase in inequality. As curfews and other movement restrictions were implemented, the better-off households were able to save more than usual. However, the less fortunate were obligated to put themselves in debt to continue their daily expenses.
The French Government has been toying with the idea of decreasing the donation tax. This would reduce the amount taken from donations and wills. It is the belief that by reducing this tax, the older and richer generation would give more of their money away to their younger family members or friends and an increase in consumption would ensue. However, the French Green Party sees this as a blind attempt that would solely increase consumption in an indistinctive manner and not favour local economies, nor transitions to ecological economies. Considering that most governmental spending is burdened with the health crisis, this is a golden opportunity to start momentum towards the inevitable ecological changes societies will have to adhere to in the future.
A Possibility for an Ecological Transition
The EELV party proposes a different direction on how to use the surplus money. The first part is to address the inequality created by the health crisis. In France, income tax is a progressive tax; however, that is not the case with the revenue generated by savings. The savings income tax in France is fixed at 30% regardless of the revenue generated. The top 20% responsible for 70% of the increased 200 billion euros are greatly advantaged relative to less fortunate households. The inequality gap is widened.
The solution proposed for this issue is to apply a progressive tax system similar to income tax on savings income. This enables a more equitable tax method. The next part of the Green solution concerns mobilizing the surplus into an ecological transition. The method for an ecological transition is a two-step solution.
The first step is to implement the food checks proposed by the Convention Citoyenne Pour le Climat. The food checks would allow the lower-income households to purchase high-quality, organic, short food supply chain food.
The second and more ambitious part revolves around thermal housing renovations. Poorer households often lose more heat to their surroundings due to poorer construction quality. The inhabitants of these households are forced to pay more for heating. This loss of heat is a massive waste of energy. EELV believes the increased capital the government will receive from the surplus must go towards thermal renovations. According to the French Green Party, the savings surplus must be used to set France on a path of ecological transition and decrease inequalities.
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