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Tax Evasion as Seen by French Tax Administrations from the 1920s to the 1970s: Pragmatism in Action

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Tax Evasion and Tax Havens since the Nineteenth Century

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Abstract

The aim of this chapter is to study how the French tax administration perceived and assessed voluntary evasion of income tax between its introduction in July 1914 and the strengthening of tax control capacities in the 1970s. The chapter begins with the inter-war period, which was marked by the need for reconstruction. The fall in economic activity, the generalisation of the black market and the patriotic basis of the refusal to pay taxes doomed these reforms. After the troubles of the Liberation, the re-establishment of democratic institutions and the massive involvement of the State in the reconstruction and organisation of the social state forced a reaction. However, the system remained deeply unequal, with labour income that could not be hidden being the most taxed, while part of the income from capital escaped taxation. The increase in tax revenues and in tax adjustments are more the result of the economic and social transformations of the 1950s and 1960s than of the increase in funds allocated to the fight against fraud. The cross-checking of information on taxpayers and the exemplary nature of controls reduced fraud and improved tax yields, but without making them more equitable.

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Notes

  1. 1.

    Reports of the Inspection des Finances. 1959. Thematic reports on “tax reform”. Report by Inspector General Auboyneau on reform of personal income tax, 13 March 1959. Service des archives économiques et financières de la France (SAEF) Savigny-le-Temple, Seine et Marne, France. 4A-0002365.

  2. 2.

    Tax reforms. Parliamentary projects and discussions (1919–1920). Chamber of Deputies annexed to the minutes of proceedings (PV) of the sitting of 29 April 1920. Bill to allocate funds to strengthen the administrations responsible for tax assessment and collection and financial control, presented by Paul Deschanel, President of the Republic, and Frédéric François-Marsal, Minister of Finance, 55 p. SAEF B 33 971.

  3. 3.

    Examination of provisional credits applicable to the first quarter of 1920. Caisse des dépôts et consignation. Supervisory Commission—Documents (1921–1926). SAEF B 43 148.

  4. 4.

    Speech by Auriol to the Chamber of Deputies, 12 April 1920. Tax reform projects (1920–1924). SAEF B 33 971.

  5. 5.

    Unsigned text of 24 June 1921. Caisse des dépôts et consignation. Supervisory Commission, Directorate General of Registration. SAEF B 43 148.

  6. 6.

    Measures to be taken against tax fraud and evasion. Execution of the ministerial circular of 3 February 1922, note from the Director-General of CD to the Minister of Finance, 28 February 1922, p. 15. SAEF B 43 157.

  7. 7.

    Reports of the Inspection des Finances. Report on the work carried out during the year 1920, p. 39. Work of the CD, pp. 8–13. SAEF 4 A 1.

  8. 8.

    Annexe to the minutes of the meeting of 7 June 1921, report presented on the draft budget for 1921. Caisse des dépôts et consignation. Supervisory Committee. Senate. SAEF B 43 148.

  9. 9.

    Tax legislation. Measures to be taken against tax fraud. Central Division, n° 1–79. Note from Deligne to the directors, 28 January 1922. SAEF B 43 157.

  10. 10.

    Studies on the merger of the CD and Enregistrement (registration) departments. The commission was created by the order of 21 June 1921. Caisse des dépôts et consignation. Supervisory Committee. SAEF B 43 148.

  11. 11.

    Idem. Report to the President of the Republic on the administrative reorganisation, Paul Doumer, Minister of Finance, 12 October 1921, conclusions of the work of the first sessions of June and July 1921, submitted to the Minister on 5 August.

  12. 12.

    Idem. Senate. Annexe to the minutes of the session of 7 June 1921, report presented by Henry Chéron on the draft budget for 1921.

  13. 13.

    Budget financial measures. Savings and new tax resources (1923–1924), Directorate-General of the CD. Note sent to the Senate Finance Committee on 6 March 1924, speech to the Chamber on 22 February 1923. SAEF B 33 995.

  14. 14.

    Idem. Speech to the Chamber on 5 March 1923.

  15. 15.

    Idem. Directorate General of Registration. Reactions to the proposal to create a financial study and organisation department were presented by senators Albert Sarraut and Anatole de Monzie on 22 April 1920, signed by the Director-General, 23 November 1921.

  16. 16.

    Tax legislation. Measures to be taken against tax fraud. Central Division, n° 1–79. Notes for discussion by the Senate Finance Committee, 10 March 1924. Note from Deligne to the Minister of Finance, 28 February 1922, p. 15. SAEF B 43 157.

  17. 17.

    Idem. Mesures propres à améliorer le rendement de l'impôt et revenus publics recouvrés par l'administration, circular addressed to the directors of the departments, signed by Deligne. Directorate General of Registration. 13 February 1922, p. 37.

  18. 18.

    Idem. Note from the Directorate General of CD and of the Registration responding to the request for information on legislative and regulatory measures adopted since 1 January 1922, to improve the tax base and collection, 14 May 1923.

  19. 19.

    Taxation. Tax legislation. Tax evasion. Coupon slips and booklets. Directorate General of CD. Note on the coupon book, 26 January 1923. Intervention by Deputy Bokanowski in the Chamber, session of 13 November 1922, Journal Officiel (JO), Parliamentary debates, p. 3088. SAEF B 57 744.

  20. 20.

    Idem. Note on the coupon book, unsigned, 26 January 1923.

  21. 21.

    Carte d'identité fiscale Projets de décrets loi (1933–1934). The coupon slip was suspended by the decree of 22 February 1925, and then repealed by the law of 13 July 1925. SAEF B 33 994.

  22. 22.

    Tax legislation. Measures to be taken against tax fraud. Directorate General of Registration, Central Division. Folder addressed to the President of the Council, communication made on behalf of the Minister in response to the Senator for Aube, Victor Lesaché, requesting a complete list of repressive texts voted since 1919, 23 February 1926. SAEF B 43 157.

  23. 23.

    Idem. Examination of the articles of bill n° 6980, having for its object the realisation of savings, the creation of new fiscal resources and various measures of a financial nature, articles voted by the Chamber of Deputies, 29 February 1924. Text sent to the Senate Finance Committee on 6 March, which became the law of 22 March 1924.

  24. 24.

    General income tax on securities. Note by Baudoin-Bugnet, for the Minister of Finance, 12 July 1929. SAEF B 0058613.

  25. 25.

    Budget. Finance Act (1936–1938). Bill to establish the general budget for the year 1936. Directorate-General of CD. Observations on the amendment to the bill presented by Joseph Denais, proposing a return to the optional flat rate, 14 p. SAEF B 33 993.

  26. 26.

    Service des vérifications de comptabilités. Organisation of the brigades, central personnel office, undated, p. 7, SAEF B 42 115.

  27. 27.

    National Investigations and Audits Directorate. Note from Jean Watteau, Director General of the CD, on the organisation of documentation, 30 March 1939. SAEF B 643.

  28. 28.

    Idem. National Investigations and Audits Directorate. Economic documentation: verification of accounts. Note relating to the conditions for carrying out account verification programmes for the year 1941. Signed Pierre, Director, 9 March 1942.

  29. 29.

    Idem. Note on the organisation and results of income tax audits, addressed to the Minister, unsigned, 23 December 1938.

  30. 30.

    Reform of the central controls of the Directorate General of the CD (1937–1947). Report on the first year of the administrative reorganisation and the creation of central controls, December 1940. SAEF B 42 116.

  31. 31.

    Reorganisation of the administration of the CD (1937–1940). Directorate General of the CD. The general economy of the reform. Unsigned note, but probably from Chezleprêtre, the instigator of the reform. SAEF B 42 114.

  32. 32.

    Tax inspection (1946–1952). Statistical information. Note for the Minister of the Economy on the Economic Documentation Directorate, Chezleprêtre, 8 June 1943. SAEF B 641.

  33. 33.

    Unsigned, Dix ans de contrôle fiscal en France. Le problème de la fraude fiscale dans les diverses étapes du redressement économique de 1945 à 1955, Ministry of Finances, 1955, Imprimerie nationale, 46 p. SAEF Library.

  34. 34.

    Contrôle fiscal, renseignements statistiques (1946–1954). DGI, note on statistical documentation, 20 April 1949. SAEF B 641.

  35. 35.

    Tax inspection (1953–1960). Miscellaneous. The creation of the commission is included in the Finance Act of 31 January 1950. This commission did not produce any reports. SAEF B 637.

  36. 36.

    SAEF B 28 371. Tax reform commission 1952. Notes concerning turnover taxes, Jean Ribière, rapporteur.

  37. 37.

    Unsigned, Dix ans de contrôle fiscal…, op. cit.

  38. 38.

    Tax reform (1951–1954). Minutes of the meetings of the Loriot Commission. Reform project presented by the General Inspectorate of Finance on 5 May 1952. SAEF B 28 388.

  39. 39.

    Assemblée nationale, declaration of investiture of Antoine Pinay, 7 March 1952, JO, p. 1.

  40. 40.

    Tax reform (1951–1954). General report of the Loriot commission, 12 July 1952, p. 63. SAEF B 28 388.

  41. 41.

    Tax reform 1952. Report of the Abelin Committee, p. 48. SAEF B 28 372.

  42. 42.

    Unsigned, Dix ans de contrôle fiscal en France…, op. cit.

  43. 43.

    Thematic reports of the Inspectorates of Finance control brigades, 1957. Note on the revenue control brigade headed by Chief Inspector Macart, signed Thomas, 9 February 1957. The brigade was created on 1 June 1952, to verify the tax situation of: foreigners residing or domiciled in France; persons whose lifestyle or conspicuous and notorious expenses were not related to their declared income; taxpayers who had refrained from filing a return and whose income was not known. SAEF 4A-0002325/1.

  44. 44.

    Tax reforms (1954–1955). Projects. SAEF B 58 846.

  45. 45.

    Tax studies and control service. Tax auditing (1954–1958). Note by Blot for the Minister on the situation and prospects of tax auditing, 30 November 1956. SAEF B 58 847.

  46. 46.

    DGI. Tax control (1953–1960). CD. Audits of accounts, General Administration Department. Report on the difficulties encountered in the establishment and execution of audit programmes in 1957, signed by Pradel, 10 March 1958. SAEF B 637.

  47. 47.

    DGI. Tax inspection (1953–1960). Note by Blot on the activity of tax inspection in 1960, 26 September 1960. SAEF B 637.

  48. 48.

    DGI. The organisation of work, directives (1958–1967). SAEF B 53 986.

  49. 49.

    DGI. Tax inspection (1953–1960). Note by Blot for the head of the general administration, 15 April1960, 4 p. SAEF B 637.

  50. 50.

    The organisation of work directives (1958–1967). Note for the Director-General of the Directorate General of Taxes, Sub-Directorate II D. Subject: Audits of accounts. Analysis of the results for 1967 and prospects for 1968. Measures to be taken, signed by the head of department Bertaux and drafted by Tixier, 8 November 1968. SAEF B 53 986.

  51. 51.

    Reports of the Inspection de Finances. 1959. Tax reform. Report by Inspector General Auboyneau on reform of personal income tax, 13 March 1959. SAEF 4A-0002365.

  52. 52.

    Tax reforms (1952–1958). Suggestions, proposals, studies. National Assembly, annexe to the minutes of proceedings of the sitting of 27 March 1953, discussion of government bill no. 5798 of 6 March 1953 and bill no. 6057 tending to simplify taxation and correct its injustice, tabled by Francis Leenhardt and members of the Socialist group. SAEF B 58 840.

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Authors and Affiliations

  1. University of Lille, Lille, France

    Béatrice Touchelay

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  1. Department of History, University of Lausanne, Lausanne, Switzerland

    Sébastien Guex

  2. Institute of Political Studies, University of Lausanne, Lausanne, Switzerland

    Hadrien Buclin

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Touchelay, B. (2023). Tax Evasion as Seen by French Tax Administrations from the 1920s to the 1970s: Pragmatism in Action. In: Guex, S., Buclin, H. (eds) Tax Evasion and Tax Havens since the Nineteenth Century. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-18119-1_15

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  • DOI: https://doi.org/10.1007/978-3-031-18119-1_15

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