The taxation of the richest is definitely at the center of parliamentary debates on the Budget. Following the rejection of the Zucman tax (and its lighter version), deputies adopted on Friday, October 31, an amendment to the finance bill that transforms the current “tax on real estate assets” into a “tax on unproductive assets.”
The amendment, proposed by a Modem deputy and modified by the socialists, was voted by a heterogeneous alliance that brought together the RN, the PS, Modem and the deputies of the centrist Liot group.
For this new tax to be effectively implemented, it must appear in the final version of the finance bill approved by Parliament. But what then is the “tax on unproductive wealth”?
Tax what is “unproductive”
The MEPs decided to modify the current IFI (real estate tax) to expand it. Thus, not only real estate, but also certain material assets and financial investments will be taken into account in the calculation.
More precisely, so-called “unproductive” assets will be included, such as precious objects, gold, coins, cars, yachts, planes, furniture, works of art, but also digital assets, according to its explanatory statement.
Another novelty: life insurance not intended for productive investments will also be subject to the IFI. More precisely, these are “life insurance sums, annuities or values, excluding those expressed in units of account as mentioned in article L. 131-1 of the insurance code.” Therefore, life insurance linked to investment funds will be excluded from the tax, which allows all invested capital to be placed in shares subject to fluctuations in the financial markets.
An exception for a residence of maximum 1 million euros
The deputies also modified the IFI scale, replacing the progressive scale (from 0.5 to 1.5% depending on the sections) with a single rate of 1% “for the sake of readability and efficiency.” Finally, the text provides that one residence per tax household can escape the IFI, up to a limit of 1 million euros.
Current IFIs tax all types of real estate (with certain exemptions). Initially, modern deputy Jean-Paul Mattei wanted to exclude so-called “productive” real estate from the tax, that is, properties rented on a long-term basis (more than one year), but this exception was abandoned.
Modem proposed raising the eligibility threshold for IFIs from 1.3 million to 2 million, but here too the socialists refused. Therefore, households will still have to pay the IFI 1.3 million euros (excluding exemptions).
Different readings
Not all parliamentary groups have the same interpretation of the scope that this new version of the IFI could have. Thus, the socialist Philippe Brun welcomed before the press the “reestablishment of the wealth tax” eliminated by Emmanuel Macron in 2017. But the other left-wing parties do not seem to agree with him and did not vote in favor of the amendment.
He denounced a “weakened real estate tax”, regretting in particular the exclusion of the tax household residence base. If a part of the left considers this new version of the IFI too timid, other deputies believe, on the contrary, that it goes too far.
“There is no certainty about what it contributes”
The Modem initiative is not unanimous among its partners. “What was voted on was the tax on financial wealth, the program of the National Rally,” accused Paul Midy (Ensemble).
The government, for its part, issued an unfavorable opinion. “There is no certainty about what it will contribute,” said the Minister of Public Accounts, Amélie de Montchalin. “Is this the reestablishment of the FSI? It is a form of FSI on funds and liquidity in euros,” he concluded.
Source: BFM TV
