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Economy

France hands out one billion euros in tax breaks for wealthy

media French tax forms AFP

France handed out one billion euros in tax rebates to its richest citizens last year, the head of parliament's finance committee has revealed. Some 3,500 households worth more than 10 million euros received most of that sum in rebates thanks to a cap on wealth tax.

The French government would have been 1.077 billion euros richer in 2015 were it not for the ceiling on the wealth tax, a finance ministry reply to a question by finance committee chairman Gilles Carrez has shown.

The limit means that households cannot pay more than 75 percent of their year's income in the impôt sur la fortune (ISF), which is a tax on their assets.

The average rebate was 142,480 euros but the 3,590 richest households, who have assets of 10 million euros or more, were let off 944 million euros in total, an average of 263,000 euros each.

They would have paid 3.6 times more were it not for the cap.

Although the number of people paying the tax continues to rise, state income has stayed almost the same thanks to the limit.

A total of 342,942 households filed declarations for ISF in 2015, up from 331,010 the previous year, but the state only netted 26 million euros more, 5.224 billion euros compared to 5.108 billion in 2014.

That is because 9,575 households benefited from the cap, up from 8,872 the previous year, pushing the cost to the state up 19 percent.

World's richest woman paid no wealth tax

Good accountants can seriously reduce your tax bill in France, as elsewhere.

Loréal heiress Lilianne Bettencourt, the richest woman in the world, received a 61,452,312-euro rebate, meaning that she paid no ISF at all, according to documents revealed by the Canard Enchaîné weekly.

She was among 50 wealthy people who received an average 90 percent rebate.

Ideology and tax exiles

The figures prove that "ideology doesn't work", Carrez, a member of the right-wing Republicans party, told Le Figaro newspaper.

The current system costs the state more than the controversial tax cap introduced under former president Nicolas Sarkozy, he claimed, calling the ISF's current levels "confiscatory and removed from economic reality".

The right argues that high taxation is driving wealthy and talented French people into tax exile.

Actor Gérard Depardieu hit the headlines when he said he would give up his French nationality for tax reasons shortly after the Socialists were elected, as did France's richest man, Bernard Arnault, who applied for Belgian nationality.

Others, such as former budget minister Jérôme Cahuzac, choose to dodge taxes;

With whistleblowers revealing the existence of thousands of secret bank accounts in tax havens, France netted a record 21.2 billion euros from tax fraud last year.

Politics and taxes

Wealth tax has been the subject of a long political battle in France.

The ISF's predecessor was introduced under president François Mitterrand in the 1980s, scrapped by a right-wing government in 1987, then brought back by the Socialists under its new name in 1989 but with a 70-percent ceiling.

After his election in 2007, Sarkozy introduced a ceiling on all taxes of 50 percent of income, reducing 6,287 households' taxes by a total of 856 million euros.

As the 2012 election approached, he scrapped that but raised the value of assets required to pay the ISF from 800,000 euros to 1.3 million.

After winning that election, the Socialists introduced a supertax on individuals, leading to controversy when figures were published showing 8,810 people paying more than their total annual income.

The government was ordered to scrap the supertax and bring back a ceiling, set at 75 percent, by the Constitutional Council.

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