Wealth Tax Backed by French Lawmakers Is Panned by Government
(Bloomberg) -- French Budget Minister Amelie de Montchalin criticized a bill adopted by the National Assembly for a 2% wealth tax, saying the measure — which is unlikely to become law — would hurt investment and job creation.
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The measure 'would have one grave consequence for our country and that is that the investment, entrepreneurship and corporate growth that we are trying to promote because it's good for the French, for jobs and everyone's wealth, would drop, and that's not tolerable,' she said Friday in an interview on TF1 television.
Montchalin spoke hours after the lower house of parliament adopted the proposal for a 2% levy on the country's ultra-wealthy citizens. The so-called 'Zucman tax,' named for French economist Gabriel Zucman, was backed by green and leftist lawmakers but not by the government, centrist, conservative or far-right groups. It's not expected to go any further in the legislative process.
Calling the vote a 'historic victory' in a post on X, Zucman said it represents a 'giant step forward for France and could inspire other countries.' He backs adoption of a 2% global minimum wealth tax on billionaires.
The measure would apply to 0.01% of the country's richest citizens, or about 4,000 people who are worth more than €100 million ($105 million) each, according to the proposal, which says that the wealthiest generally pay proportionally less tax than most French because of their use of tax optimization methods.
The levy could bring an estimated €15 billion to €25 billion a year into state coffers and would apply only to those not paying enough tax through other existing levies, according to the version of the law adopted by deputies. It would apply to trusts and holding companies often used for tax avoidance, it said.
Yet the measure would need to be debated and win support in the French Senate, which is dominated by right-of-center lawmakers, and it wouldn't be expected to pass.
Tax Avoidance
Montchalin said the government plans to start discussions in a couple of months with legal and other experts to find ways to fight the over-use of tax optimization strategies by the country's wealthiest citizens.
'This is the start of the process,' she said. 'We'll take measures so that this type of avoidance ceases.'
The minister reiterated President Emmanuel Macron's longstanding policy that the country's business community wants political, economic and fiscal stability, and that when taxes are too high, the wealthy choose to leave the country.
'Fiscal stability isn't to create new taxes,' she said. 'There will be mechanisms to ensure that those who steadfastly avoid taxes or don't pay taxes on revenue that is from private income will be taxed.'
France is home to some of the world's wealthiest people, including LVMH founder Bernard Arnault and L'Oreal SA heiress Francoise Bettencourt Meyers. Taxing the rich was a hot-button topic during last year's French election campaign, which resulted in a deeply divided parliament and weak coalition government.
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