As you ponder last Saturday’s match between France and Ireland you might consider some of the striking differences in both parts of the world. The culture, institutions and politics of France are very different to those in Ireland where, to some extent, the political culture has been shaped by the neighbouring island as well as the complex questions raised by national identity and affiliation within Ireland. The role of the state, the legal system and the balance of power between central and sub-country level authorities is very different.
On a superficial level, the State seems to play a much larger role in citizen’s lives in France from ‘cradle to grave’ and this is accepted across the French political spectrum. At a deeper level French society remains a strongly individualist one where the influence of the enlightenment, the French revolution and the make up of the national politic has left a profound impact on French citizens. An interesting aspect of political debate, there, is that even the ‘right-wing’ political parties do not question, in the main, the role of the state (even if, as in Ireland, the equivalent parties tend to support lower taxes, cuts in public spending and more ‘liberalism’ in areas such as employment law and trading hours, for example).
Take education as an example. Parental choice of school is an absolute right enshrined in the Irish constitution (although an increasing number of parents express dissatisfaction with the exercise of this right in practice). In France, the parent of a child goes to the local Mairie – the local municipality that is – to enrol their child in the local public school or, if they wish, enrol the child in a publicly-funded private school. In principle the local public authority allocates the child to a particular public school although in practice there is some flexibility. There is a strong and universal system of ‘écoles maternelles’ across France supplemented with a range of pre-school and early childhood centres of care. The system is largely publicly funded and is heavily subsidised. In the area of health, visits to the doctor are usually free (a modest flat fee with reimbursement) for children and adults (as in most European countries) as is access to primary, secondary and tertiary education (with some charges and expenses along the way but not on the scale familiar to Irish parents). There is an excellent system of public transport across most of France and the cost tends to be at a lower level in the large urban centres than is the case in Ireland.
What explains the difference between France and Ireland? Is it largely culture? Are public services better organised and run in France and do citizens get ‘better value for money’ (to use a very Anglo-Saxon mode of phrase)? A recent RTE programme explored 
, specifically, the contrast between France and Ireland in regards to taxation and public services. It is easy to jump to stereotype that suit one’s agenda. The statistical evidence confirms that France is, relative to Ireland, a high tax and high public spending country (refer to NERI Quarterly Facts for further information on this). The European Commission Taxation Trends shows that taxes (including social insurance, VAT etc.) came to 28.7% of GDP in the Republic of Ireland in 2012. The corresponding figure, in France, was 45%. However, there is at least one very significant difference – culturally, politically and economically – between Ireland and France. It is that enterprises, in France, spend a much larger amount by way of employer social security. The Republic of Ireland has an exceptionally low rate of employer and employee social insurance contribution. Chart 1 shows the total amount of social insurance contributions as a percentage of GDP. France shows that social insurance contributions account for 17.1% of GDP in 2012, whereas, in the Republic of Ireland it was 4.4%. The Republic of Ireland has the lowest overall rate of social insurance contribution of any EU Member State (Denmark is not included in the comparison due to the fact that is insurance system is organised in a very different way).
Chart 1: Total Social Insurance paid as percentage of Gross Domestic Product, 2012.
Source: Online Eurostat database [gov_a_tax_ag]
Even though employer social security payments are much higher in France, estimated income tax payable (including social security contributions by employees) is still higher in France than in the Republic of Ireland over various household types and levels of income (see a previous Monday Blog here).
The EU28 average contribution towards social insurance by employers, employees and self-employed is 13.0% of GDP. Were the Republic of Ireland to replicate EU norms of social insurance it would need to treble its overall take of social insurance from €7.6 billion to over €22 billion. Clearly, many European countries rely less on other taxes to make up the difference. However, the overall tax take is still lower, in Ireland, as a percentage of GDP. Even allowing for some distortion in taxable national income due to multinational enterprise activity the tax take is still below the European average. While it may be argued that governments ‘need to spend’ more on public services and goods in more ageing societies (mainly because of health-related costs and pensions), they also ‘need to spend’ more on public services or transfers in countries with a large degree of inequality in incomes (before social transfers).
The choice, politically, is not just between:
- Low-tax/low-public spend countries and high-tax/high-spend countries
But between:
- Poor-public service countries and High-public service (sometimes combined with relatively modest cash social payments to households because services are relatively good).
Voilà la difference! There is the difference.
In France you pay more – in social insurance and in other taxes such as ‘taxe d’habitation’ (residence tax related to the locality and the size of your property) for public services while, in the Republic of Ireland, you pay less and get less by way of public service. In an average French village you need to be careful crossing the road because the local public authority bin collection trucks race around throughout the week to collect refuse and recyclables – all paid for out of local taxation.
Voilà la différence. There is the difference.
So, I suggest that we are wary of politicians, commentators and economists who come to our TV screens offering treats of ‘more money in your pocket’ through tax cuts. We might ask them to price these tax cuts in public service forgone, community health centres not opened, public transport not invested in, quality and affordable childcare not provided. And if they mutter something about inefficiencies in the public sector we may ask them to quantify (a) productivities gained since 2008 and (b) potential productivities to be extracted over the next 20 year. Finally, I suggest that one does not buy the line that ‘taxes are confiscation by the State to pay someone else’. Send them to France where taxes are the price citizens pay for reasonably good public services. But, don’t ask French citizens because they will probably complain, like the Irish, about everything from the weather to the state of public services in France!
Voilà la différence. Or, rather similarity!