French President Francois Hollande and his socialist administration want to raise taxes on citizens earning over €1 million annually to 75%. Many in France are calling the President’s plans ‘folie fiscale’ (tax madness).
Unemployment in France has leapt to a 15-year high and the International Monetary Fund has reduced the country’s growth forecasts to well below the 0.8% Hollande needs to reduce the deficit.
Mr Hollande, who is nicknamed ‘Flanby’ – after a beige and sugary dessert – has said that paying the 75% tax rate is a sign of ‘economic patriotism’.
France’s constitutional court vetoed the measure late last year on the grounds that the proposed ‘supertax’ was unfair and therefore unconstitutional. The court stated that the application of such a tax would fail to ‘recognise equality before public burdens’. Since the 75% rate would have been applied to individuals, it would have meant that an individual earning over €1 million a year would have been subject to the tax, but a couple each earning €900,000 would not.
However, despite the ruling, President Hollande remains determined to enact the supertax, with a similar proposal already being drawn up. Quelle horreur!
French entrepreneurs are also anxious about a proposed increase in capital gains tax on sales of company stakes, arguing that this will kill the market for innovative start-up companies in France.
The unfortunate reality for socialists is this: eventually you run out of other people’s money. When the spirit of enterprise and toil is destroyed, it won’t be long before there is nothing left to plunder.
Leading French actor Gerard Depardieu has taken Russian citizenship to avoid the higher taxes. The Russian Federation has a flat income tax rate of 13%. He will have to live in Russia for 6 months each year in order to qualify for the 13% rate. Mr Depardieu has won the support of many French actors, including Brigitte Bardot, who has said she may also quit France (though Bardot’s concerns are about the mistreatment of elephants).
Rama Yade, a minister under Nicolas Sarkozy’s last government, said: ‘We’re losing the rich, like Depardieu…and the poor feel betrayed. France is the one getting weakened, and its future is being sold off cheaply’. Mr Depardieu is likely to make the majority of the 80 people he employs redundant.
France is not only losing tax revenue from these wealthy elopers. It is also losing the jobs and businesses that create wealth in the first place. As the journalist Jean-Philippe Delsol says, it is not only the wealthy who are leaving France, but those young professionals and entrepreneurs who are so crucial to the future of the French economy:
‘Nationally, it was previously estimated at some 1,000 exiles per year; today, this number should be multiplied by 5. It’s like repealing once more the Edict of Nantes in the sense that these departures will impoverish France in terms of business and industry. We are seeing a lot of young entrepreneurs, not necessarily wealthy, but who would like to get rich and will not hand over their wealth to the government. The hopeful tax exiles are therefore getting younger: today they are aged between 35 and 50, and not as before between 55 and 70. The granddad fiscal exodus is over!’
Boris Johnson, who once called Mr Hollande ‘France’s biggest tyrant since the revolution’, welcomes these disaffected Frenchmen and women to Britain’s capital. London, seen as a centre of innovation and creativity, is attracting a new generation of young French professionals. More French people live in London than in Bordeaux, Nantes or even Strasbourg. Indeed, it could be regarded as France’s sixth biggest city in terms of population.
France’s loss is most certainly Britain’s gain.