France's Migaud Advocates Creation Of Minimum Tax

by Ulrika Lomas, Tax-News.com, Brussels

01 October 2009

In a recent announcement, President of the French National Assembly Finance Commission Didier Migaud has revealed his support for the introduction of a new minimum tax in France, and has also advocated increasing the existing tax levied on the financial sector.

In a bid to create a fairer tax system in France, Didier Migaud plans to propose two amendments to the finance bill.

Migaud’s first proposal aims to establish a minimum tax in France. According to Migaud, tax initiatives introduced by the government over the past few years have merely served to create an less fair system of taxation. Alluding to the government’s decision to include social contributions in the tax shield or “bouclier fiscal”, which prevents taxpayers from paying more than 50% of their income in taxes, Migaud emphasised that this was indeed a grave error, particularly given the country’s spiralling social deficit.

The second proposal outlined by the Finance Commission President is to increase the current tax burden on the financial sector, by increasing the corporate tax levied on this sector by 10%. Such an increase could, Migaud explained, generate in the region of between EUR1bn and EUR2bn per year.

As a further measure, Migaud suggested adjusting the rate of payroll tax, thereby ensuring that, for example, a trader on the stock exchange and a nurse were no longer taxed at the same rate of 13.6%. A new tax could be created, he added, of between 20% and 25% for pay over a certain level.

Regarding the government’s most recent decision to increase the tax levied on “retraites chapeaux” or enhanced final salary pensions, and on capital gains derived from stock market activities, Migaud remained sceptical, emphasising that the effect of this decision will ultimately be nullified for the most fortunate, by the effects of the tax shield.

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