French govt to review tax on high-earners

PARIS (AFP) – The French government will consider bringing back a tax on high earners which President Emmanuel Macron abolished early in his presidency, a key demand of “yellow vest” protesters who have been blocking roads and fuel depots for weeks, officials said yesterday.

“If something isn’t working, we’re not dumb, we’ll change it,” government spokesman Benjamin Griveaux said on RTL radio, though “the issue is not on the table for now.”

Ending the ISF “wealth tax” on high earners was a key part of Macron’s pro-business presidential campaign, seen as a way of encouraging people to invest and hire in France.

The goal was also to stem an exodus of millionaires and billionaires toward countries with lower tax burdens such as Belgium or Luxembourg.

The levy applied to around 350,000 French households whose combined assets exceeded 1.3 million euros (USD1.5 million).

French Government’s spokesperson Benjamin Griveaux leaves the Elysee presidential Palace after attending the weekly Cabinet meeting yesterday in Paris. – AFP

In cutting the tax Macron was bringing France in line with most other wealthy nations, which began ending such taxes in the 1990s.

But abolishing it cost the government an estimated 3.2 billion euros in annual tax revenue – and helped earned Macron his reputation as “president of the rich.”

The ISF was replaced with a less onerous tax on property holdings with a combined valued of more than 1.3 million euros – though it excluded investments in property shares.

Leftwing critics and labour unions have said the tax cut for the rich was particularly galling since Macron’s government has raised taxes or cut benefits for pensioners and others at the lower end of the social ladder.

The “yellow vest” movement, which originally erupted over anger at fuel tax increases, has ballooned into a wider protest over rising costs of living and a perceived disregard by Macron for the problems facing rural and small-town France.

Restoring the wealth tax quickly became one of the protesters’ key demands, along with the end of fuel tax increases to finance France’s clean-energy drive and a higher minimum wage.

Griveaux asked for “18 to 24 months to let the measure take its full effects,” saying parliament would review the results in late 2019.

“If the review shows that not enough capital is be re-injected in the French economy, I will propose re-establishing the ISF,” Equality Minister Marlene Schiappa said in a statement yesterday.

Griveaux also said the government would permanently end the fuel tax hikes planned for January if no agreement were reached at the end of the consultation period called by Prime Minister Edouard Philippe.

“We’re going to look for solutions together. If at the end of these discussions no good solutions have been found, we will accept the consequences” Griveaux said.

“We’re not in politics to be right. We’re in politics so that things work out,” he said.