Squeeze is on for French rich as socialists go after wealthy
Pledges to target fat cats are about to be delivered, writes ANGELIQUE CHRISTAFISin Paris
SINCE ITS revolution, France has had a reputation for loving to hate the rich. But it has always boasted mega-wealthy business leaders, global brands, moneyed aristocratic families and designer luxury. Now it could be set for a new record as the European country doing the most to soak the rich.
The president, François Hollande, made no secret of his election pledge to squeeze fat cats and hit the mega-rich, making them bear the brunt of “sacrifices” needed to fix public finances.
This week he was true to his word. The wealthiest households, banks and big business are to shoulder the best part of €7.2 billion in tax rises this year, and more next year. France, already the only EU country with a wealth-tax, will increase it, with people worth more than €1.3 million paying a one-off levy this year.
Inheritance tax, lowered by Sarkozy, will rise. New taxes are aimed at bank profits, dividends, bonuses, stock options, big businesses and energy companies holding petrol stocks.
“I’m not the enemy of money,” argued the prime minister Jean-Marc Ayrault, saying small businesses and the working and lower-middle class would be spared. It was, he added, all about a “fair” effort in crisis-hit France. Hollande, who once said “I don’t like the rich”, had warned before his election that the wealthiest would have to do the most to drag France out of the crisis.
Despite the criticisms of certain big business leaders, some top footballers and the 1960s hit singer Françoise Hardy – who complained she would have to quit France if taxes went up – the French public is overwhelmingly in favour of squeezing the rich.
A BVA poll this week showed 75 per cent favour the increase, including a majority of rightwingers. Another 73 per cent approve of Hollande’s signature measure: a 75 per cent tax on income beyond the €1 million mark, to be introduced next year. Another poll by TNS Sofres found 80 per cent see France as a country where it is difficult to talk about money.
The main question remains how Hollande, who refuses to use the word austerity, will couple the tax increases with the state auditors’s demand for an “unprecedented” brake on public spending.
But the government has paid little heed to those critics who liken the tax rises to Britain in the 1970s. The British prime minister, David Cameron, who is lowering the UK’s top tax bracket while the French prepare to raise theirs, promised to “roll out the red carpet” to fleeing French firms.
Stephane Rozes, head of political consultants Cap, said: “In terms of public opinion, what works in Hollande’s favour on the tax rises is that it was expected – it had always been detailed during presidential debate.”
The public perception under Sarkozy was that the rich were getting an easy ride through rebates, tax breaks and loopholes. The question remains whether any wealthy French will actually take up Cameron’s offer and settle in London.
Jean-Philippe Delsol, a tax lawyer and member of the economic think-tank IREF, said he had seen a “considerable increase” in wealthy clients who were preparing to leave France: about 10 in the past two months, compared to two in the whole of last year. He was seeing an increase in young entrepreneurs aged 35-45 interested in moving to London.
Delsol believes the combined effect of various tax rises would mean that some high-net-worth people could end up paying a marginal rate of 90.5 per cent tax on certain income. “It is exorbitant, confiscatory and scandalous,” he said comparing the levels to “pre-Thatcher” Britain under Harold Wilson.
“The more you tax the rich, the less it brings in. This is because the rich adapt, they leave, transfer their money into capital, sell their affairs, work less, move. This is a punitive tax, not a productive tax.” “It’s not that France doesn’t like the rich, it hates them. France is a paradox: it loves glitter yet hates money. It loves pop-stars and footballers who earn a lot, it loves reading celebrity magazines about wealthy aristocrats and their expensive weddings, while hating business people who earn a lot.”
On the Cote d’Azur, Paul Humphreys, head of the French department of estate agents Knight Frank, said the new social charges to be levied on non-residents selling or renting out their second homes did not mark a “fundamental” change to the market.
“The reality is that you can’t keep the British away from France.” – (Guardian Service )