French residents with assets valued above 4 million euros ($4.9 million) will pay more than double what they had expected in wealth taxes this year, after the country’s parliament voted through an emergency measure to raise €2.3bn for the cash-strapped government.
The increase – known as the contribution exceptionnelle sur la fortune – is a stop-gap measure introduced by François Hollande, the new Socialist president, to reverse his predecessor’s move to cut the wealth tax.
It is part of a series of taxes being imposed on wealthy citizens and companies that some business leaders claim will drive entrepreneurs and investors abroad. France is also planning a 75 percent tax on salaries above 1 million euros, although Jérôme Cahuzac, budget minister, said this would be revised once the country cleared its debt.
David Cameron, Britain’s prime minister, angered the French government recently when he said he would “roll out the red carpet” to French citizens and companies who wanted to flee its punitive taxes.
The temporary measure voted through by the French national assembly on Thursday is intended to recoup cash that would otherwise have been lost to the tax cut introduced by Nicolas Sarkozy, Mr Hollande’s right-of-centre predecessor. The 2.3 billion euros to be raised from the supplement makes up almost a third of the 7.2 billion euros in additional taxes for 2012 imposed by the new government to reduce France’s deficit.
The tax affects people with fortunes estimated at more than 1.3 million euros, but it increases depending on the value of the assets – those with over 4 million euros will see their tax double. It is estimated that the wealth tax charge will raise 5.7 billion euros overall this year, including the 2.3 billion euro emergency increase.
The government is to rework the tax next year, but Mr Cahuzac spoke of the “tough effort demanded of those who can afford it”. The right-of-centre opposition said the measure was “confiscatory”.