France Has No Plans To Deal With Wealth Tax In 2005

by Ulrika Lomas, Tax-News.com, Brussels

22 September 2004

French Budget Minister Dominique Bussereau confirmed yesterday that there are no plans in the government’s 2005 budget to abolish or reform the unpopular wealth tax, thought responsible for billions of euros in capital flight from the country.

"If the government had a preference on this, we would have proposed a measure,” Bussereau told French television, according to Reuters. “If the senators or deputies propose one, we will study it," he added.

Whilst Finance Minister Nicolas Sarkozy has acknowledged that the wealth tax, known as the ISF (Impôt Sur la Fortune), is an obstacle to capital repatriation, he is awaiting the results of a parliamentary debate on the issue before proposing any changes to the regime.

Plans for an amnesty on undeclared offshore assets have also been shelved by the government.

"We do not wish to change the rules of the game," Bussereau continued. "But we will begin a parliamentary debate of three months in the two chambers (of parliament). That will be the occasion to talk about it."

The ISF, introduced in the 1980s, is an annual levy on declared capital of more than €720,000, and is applied on a progressive scale from 0.5% to 1.2%.

According to a parliamentary report, the tax is thought to be responsible for the flight of around €11 billion from France in the last five years.

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