L'Humanité in English
Translation of selective papers from the french daily newspaper l'Humanité
decorHome > Economy > France’s Wealth Tax: Great Fortune is Fairing Well
 

EditorialWorldPoliticsEconomySocietyCultureScience & TechnologySport"Tribune libre"Comment and OpinionTranslators’ CornerLinksBlog of Hervé FuyetBlog of Kris Wischenkamper
About Taxation, read also
decorA Profitability Pact for the Big Corporations decorApple invents subsidiaries without fiscal domicile decorCAC 40 salaries reach new heights decor"Social" Sales Tax: The Great Hold-up decorSarkozy fiddles with the wealth tax decorFrance’s Rich List Is Getting Longer decorSarkozy pecks at capital gains
Economy

ORIGINAL FRENCH ARTICLE: ISF : les grandes fortunes se portent bien

by Clotilde Mathieu

France’s Wealth Tax: Great Fortune is Fairing Well

Translated Monday 25 February 2008, by Claire Scammell

Taxation. France’s Solidarity Tax on Wealth (ISF) has generated 4.42 billion euros, 19% more than in 2006. The Bouclier Fiscal could dramatically reduce this figure by a few hundred million euros.

Once again the number of people in France falling into the category ‘wealthy’ has risen. In 2007, 528,000 taxpayers paid the Solidarity Tax on Wealth resulting in a total of 4.42 billion euros. In five years the total number of people liable to pay this tax has risen by 85%. According to Vincent Drezet, the National Secretary of the SNUI (Unified National Union for Taxes), several factors can explain this rise. First of all, “the combined increase of transferable assets (or financial securities) and of the property market has brought the taxpayer back within the reach of the ISF”. Then there is the “demographic effect”; with age debt decreases and in turn net asset value (the value of assets minus debt) must increase. Lastly, “there are people whose assets have grown following an inheritance”.

The Different Faces of the ISF

Our tax specialist distinguishes three major categories of taxpayers. Half of all those liable to pay wealth tax fall into the first group, those who make a contribution not in excess of 2000 euros per year. The typical household in this category is a couple who pay 440 euros of wealth tax for net assets of 830,000 euros. These assets are comprised of a main residence worth 600,000 euros and a second home worth 200,000 euros with 150,000 euros worth of transferable assets on top. A typical household of the second category has net assets of 1.9 million euros and pays 8,100 euros in wealth tax. The last category represents only 1.2 % of ISF taxpayers, people of considerable wealth with net assets worth more than 10 million euros. By comparison, a retired farming couple from L’île de Ré who, with an income of 1000 euros, must pay 3710 euros of wealth tax, are “an anomaly of the tax system concerning barely a dozen individuals”, in the words of the unionist.

The Bouclier Fiscal Prompts a Lukewarm Response

The revenue of 4.42 billion euros could be cut by 350 million if every one of the 16,000 individuals taxable under the ISF and covered by the Bouclier Fiscal called for its application. The Bouclier Fiscal allows taxpayers to claim a rebate if the sum due (income tax, ISF and local tax) exceeds 60% of their income (or 50% incorporating national insurance) since the 1st of January. Yet only 6000 households (37.5%) have actually made a claim so far. According to Vincent Drezet “many of those who qualify for a rebate are not aware that they can put in a claim”. “Many taxpayers are not claiming a rebate because they have calculated ‘borderline’ tax and financial figures and don’t want the administration taking a look at their papers”. In 2008 government estimations predicted a state shortfall of 563 million euros from the 18,000 taxpayers who qualify for a rebate under the Bouclier Fiscal.

A Blanket Reform is Needed

The majority union for taxes in France laments the fact that “the debate over taxation has arisen on wealth tax alone, which represents only 1.5% of France’s revenue from tax”. “The real debate takes place elsewhere. The Government wants to lighten taxes which weigh on production and increase taxes on consumption through VAT in particular, which represents 50% of revenue”. Yet it is “on the whole, an unjust tax; 10% of the poorest households give up 8.1% of their income in VAT whereas 10% of the wealthiest households contribute only 3.4% of their income”. According to the unionist these new lines of thought on the subject should be an opportunity to organise a truly public debate.


Follow site activity RSS 2.0 | Site Map | Translators’ zone | SPIP