A French government plan to eliminate a wealth tax on yachts, racehorses and other luxury possessions is drawing fire on the left and causing disquiet among some lawmakers in the ruling party.
The centrist government of French President Emmanuel Macron wants to replace the wealth tax with one that would apply only to real estate as of Jan. 1 next year.
The tax cuts are designed to stem an exodus of entrepreneurs and millionaires, French Minister of the Economy and Finance Bruno Le Maire said.
However, Legislator Joel Giraud of the ruling Republic on the March (LREM) party said that while “the new tax structure ... will add liquidity to the economy, there are aspects that should be reviewed.”
Speaking to the Paris daily Le Parisien, he said: “A yacht is for showing off, it’s not productive for the economy... Symbols like that should be much more heavily taxed.”
Under the reform, possessions such as yachts, private jets, race horses and luxury cars would no longer be subject to the Impot sur la Fortune wealth tax.
About 350,000 French households pay the wealth tax, which applies when an individual’s combined property is worth 1.3 million euros (US$1.54 million) or more.
It is to be replaced by a tax on real estate — the “Impot sur la Fortune Immobiliere” (IFI) — although investments in property shares will not be taxed.
The reform is also aimed stimulating economic activity and encouraging the wealthy taxpayer to invest in the “real economy.”
However, it would cost the government nearly 3.2 billion euros in lost tax revenue, to the dismay of leftist lawmakers and unions.
Some LREM lawmakers fear the measure will look too much like a gift for the wealthy.
Legislator Benedicte Peyrol, who is a member of the National Assembly’s finance committee, said they hoped to “find a way” for luxury items to “be a part of the state budget.”
However, Le Maire disagreed.
“The IFI has a clear basis and that’s real estate,” he told the committee. “I oppose complicating the IFI by adding yachts, luxury cars, jewels and why not wine cellars.”
Macron, speaking to the media on Friday after an EU summit in the Estonian capital of Tallinn, brushed off criticism that the tax changes favored the rich and boosted inequality.
“We want to reward work better, to help people to succeed,” he said. “We need talent. France has a fiscal structure which is no longer the best and successful talent has fled in large numbers. This will make them come back.”
“We are going to invest 15 billion euros in training, particularly for people who are the least qualified — that’s real social policy,” Macron added.
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