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French PM Decries Wealth Tax

by Ulrika Lomas,, Brussels

02 October 2017

French Prime Minister Edouard Philippe has defended the Government's plans to scale back the country's wealth tax, saying that it has prompted thousands to leave France in recent years.

According to Philippe, around 10,000 people have left France in the last 15 years, taking with them a collective EUR35bn (USD41.3bn) in assets, largely as a result of the wealth tax, known as ISF.

"When a taxpayer leaves, he pays no more tax at all, not the ISF, not income tax. Collectively, all the French lose," Philippe said, according to Bloomberg.

Under current rules, the wealth tax, or ISF, is applied to income over EUR800,000 in cases where an individual's net assets exceed EUR1.3m. The ISF rate varies from 0.5 percent to 1.5 percent, and total accumulated wealth and income tax is capped at 75 percent of the individual's net global income.

Under proposals included in the 2018 Budget, announced on September 27, investment income will be removed from the scope of the wealth tax, so that it effectively becomes a tax on high-value property. Instead, capital gains, dividends, and interest will be taxed at a flat rate of 30 percent.

The measures, which are due to take effect in 2018, have been subject to increasing criticism from the public and from the political opposition, because they will benefit a relatively small number of wealthy individuals.

However, in a speech to France's main employers' union MEDEF in August 2017, Finance Minister said that: "With the abolition of the ISF, we want to attract the investors needed to grow your business. We want to stop the flight of talent, we want to reward risk taking."

TAGS: individuals | Wealth | Finance | tax | investment | business | interest | France | dividends

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