Institute for Research in Economic and Fiscal issues

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Fiscal competition
and economic freedom

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Fiscal competition and economic freedom

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IREF wins capital victory in French Constitutional Council

A petition was submitted by French MPs to the Constitutional Council regarding the limitation on the wealth tax and the new regulations which were to take into account "virtual" incomes.

On 28 November 2012, IREF and the French Taxpayers Association addressed an argumentary (see attachment in French) to the members of the National Assembly, urging them to seize the Constitutional Council in this matter. The MPs replied favourably and passed on the request to the Constitutional Council on 20 December.

The Council’s decision was made public on 29 December, and we are very pleased to announce that it responds favourably to all our arguments.

The Council invalidated the provisions that most severely attacked the rule of law, in particular those that would create genuine inequality in terms of taxation: taxing fictitious capital gains in case of selling assets acquired by donation or inheritance, taxing vacant uninhabitable housing or housing subject to residential taxes.

The Council also questions the retroactive nature of abolishing the taxation of capital gains in 2012. Above all, it reduces the perimeter of the 75 per cent rate of the wealth tax to actual revenues. Finally, the Council put its foot down on confiscatory rates by invalidating all measures leading to taxing revenues, of any kind, at a rate exceeding 70 per cent.

The outcome clearly demonstrates that IREF’s perseverance in this instance has paid off and increased the public opinion’s awareness of how encroachments on property rights may be effectively opposed.

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