INSEE Report Shows Sarkozy Tax Reforms Benefited Rich Households Most

by Ulrika Lomas, Tax-News.com, Brussels

07 November 2008

A report published on Thursday by the French national statistics office, Institut National de la Statistique et des Études Économiques (INSEE), revealed that reforms put in place by President Nicolas Sarkozy last year principally benefited the country's wealthiest taxpayers.

Sarkozy's first budget as President, announced last September, included some EUR9bn in tax cuts already promised during the election campaign, and approved by parliament earlier that year.

These tax cuts were focused mainly on removing disincentives to work and investment. They included reductions in taxes on overtime worked beyond the 35 hour week, mortgage interest relief to encourage property investment, and the elimination of inheritance taxes for the majority of French property owners.

INSEE observed that these reforms, coupled with the reduction of the country's six income tax brackets to four, led to a significant "improvement in quality of life" for richer taxpayers, but failed to assist France's lowest earning households, which pay no income tax.

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