World Economy

French MPs Slash Wealth Tax

French MPs Slash Wealth TaxFrench MPs Slash Wealth Tax

French MPs agreed to slash wealth tax as part of the ongoing debate on next year’s budget that saw them introduce a flat tax on unearned income on Thursday. The left has accused President Emmanuel Macron›s supporters of giving “presents to the rich”, while the right accused them of not going far enough.

After a week of stormy debate, the National Assembly approved the proposal to scrap wealth tax on everything but real estate, reported.

Macron’s Republic on the Move and its Modem allies backed the move, supported by the mainstream right, while the Socialists, Communists and hard-left France Unbowed voted against.

The reform of the two taxes will cost the exchequer €4.4 billion ($5.19 billion) a year, according to the economy ministry.

Some 350,000 households currently pay wealth tax, “a 35-year-old ideological totem that had become inefficient and complex”, according to Finance Minister Bruno Le Maire.

During the week left-wing MPs signed an appeal to the government to make public the effect the changes would have on France›s 100 richest people.

After first refusing to give any figures on the grounds of confidentiality, Le Maire told parliament on Friday that the top 1,000 taxpayers pay €400 million, that the top 100 pay €126 million but that the 100 richest households pay €73 million—proof, according to him, that the tax is “inefficient and unjust” because the really wealthy find ways of avoiding it.

The left-wing accused him of playing down the reform›s repercussions, in particular by avoiding giving figures on the effect of the flat tax.

With an opinion poll published Wednesday finding 69% believing the change to wealth tax will increase inequality, the accusation of being a government for the rich has stung the government.

“In the corridors [of the parliament] ministers are asking us to stop saying it because it really annoys them,” Communist MP Fabien Roussel told Le Monde newspaper. “But they›ll have to get used to it because it›s going to stick. And we›re going to keep pounding them.”

The right, on the other hand, called on the government to scrap the wealth tax in its entirety, while also calling for more reductions in expenditure.

The National Assembly will vote Tuesday on the whole of the first part of the budget, whose elements have been debated this week.

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