Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
and economic freedom

French taxes on wealth and capital to be reformed

Less than one month after the final vote of the 2011 Tax Law, members of the French government are revealing that there are projects for several important fiscal reforms in the following months.

The first one, according to the ambition of harmonization of the French and German tax systems, is the abolition of the wealth tax, which is applied on real estate property worth more than 800 000 €. A good decision, since France is one of the last European countries to apply this tax. It will allow the taxpayer to save some 4 € billion. The problem is that the government desperately needs revenues and the minister of the economy and Sarkozy are already speaking about a new tax which will be applied on the gains from the sale of the main home.

There are also rumors that the unpopular fiscal shield will be abolished, which in fact is already almost done, since most of the 2011 tax increases are set with the express condition that they will not enter into the calculation of the total tax burden. It is however questionable if such a populist measure is really needed at that point. Indeed, it will save to the State some 450 € million, while increasing the (unfortunately difficult to measure) problem with tax evasion.

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