French bosses round on ‘deadly’ wealth tax plans
Some of France’s most high-profile entrepreneurs have rounded on a wealth tax proposal being touted by a party key to the flailing government’s fortune, warning it would risk “destroying the French economy” and sparking an exodus of the country’s wealthiest residents.
Bernard Arnault, the billionaire chief executive of luxury behemoth LVMH and France’s richest man, said that an annual wealth levy being proposed by the French Socialist party represented a “clear desire to destroy the French economy”.
“I cannot believe that the French political forces that govern or have governed the country could lend any credibility to this offensive, which is deadly for our economy,” he said in a statement.
France’s Socialist Party has put a two per cent wealth tax on people with assets in excess of €100m among its key demands for supporting the country’s new prime minister in a bid to ensure France’s super rich help trim the country’s ballooning deficit.
Its votes are seen as crucial for the Macron government’s protracted efforts to pass a budget that tightens its runaway fiscal policy, which has already sealed the fate of two Prime Ministers.
And its wealth tax – dubbed the Zucman tax after the French economist who first floated it – has gained rapid political momentum in France ever since former prime minister Francois Bayrou resigned after failing to attract enough support for a budget containing €44bn in tax rises and spending cuts.
Under Zucman’s proposals, those who meet the threshold would be subject to the two per cent levy irrespective of whether it was held in illiquid asset classes like private company shares and property or more liquid assets like equities and cash.
UK ‘no longer’ a popular destination for French expats
But the French business community has railed against the plans, with Mirakl founder Philippe Corrot warning against any tax hikes on the wealthy being “confiscatory” in comments shared with the Financial Times. Meanwhile Arnault branded Zucman – who also devised a blueprint for a global wealth tax on behalf of the G20 – a “far-left activist” with an ideology that “aims to destroy the liberal economy”.
In a post on X, Zucman said Arnault’s remarks were “without foundation”, adding: “For more than 17 years, my work has consisted of mapping the wealth of great fortunes. To study tax havens, and to objectify the techniques of tax evasion and optimsation of great fortunes.”
The increased salience of Zucman’s proposals has also triggered fears that the plans would lead the wealth exodus from France already afoot to accelerate. Thousands of French millionaires have relocated to Italy to take up the country’s flat tax of €200,000 for foreign investors, a rise which drove ex-PM Bayrou to accuse its neighbour of “fiscal dumping”.
But despite the forecast wave of emigration, a top tax adviser has said that the UK’s non-dom reforms mean it is unlikely to be a popular destination for those fleeing.
David Lesperance, founding partner at Lesperance & Associates, told City PM: “If France follows the suggestion of Gabriel Zucman and introduces a wealth tax, you will see a similar movement of UHNW taxpayers as when Rachel Reeves’s Budget included global assets in the UK IHT hit [as part of its non-dom reforms].”
“In years past, the UK would have been the natural destination for departing wealthy French taxpayers,” he added.
However, with the [non-dom reforms], this is no longer the case. In addition, Brexit and the closing of the Tier 1 Visa path means that even if they did want to come, there is not a straightforward path for them to gain residence status.”