FRENCH PRESIDENT TO CARRY OUT HIS PLEDGE

The new French President, Francios Hollande has recently raised taxes by 7.2bn Euros for this year, and more to come next year as he laid out in his election pledge.

The wealth tax is to be increased with a one off levy this year. Under the wealth tax anyone worth more than 1.3m Euros pays further tax.

Inheritance taxes are also set to rise.

There are also new taxes aimed at banks, dividends, bonuses and big business.

Properties owned by foreigners are also going to be further taxed. Any income above 1m Euros is now set to be taxed at 75%.

A recent poll of the French showed that 75% were in favour of these increases in taxes for the wealthy.

Jean-Philippe Delsol, a French tax lawyer said there is a “considerable increase” in wealthy clients who are prepared to leave France. There was particularly an increase in younger entrepreneurs interested in moving to London.

Delsol calculated that some high net worth taxpayers would pay tax at marginal rates in excess of 90%. He went on to describe the measures as “scandalous” and compared the regime to “pre Thatcher” UK 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, and move. This is a punitive tax, not productive tax” Delsol said.

It will be interesting to see what effect this has in France. It should at least stimulate the industry of tax avoidance!

Tim Corfield July 2012