France disputes the taxation of wealthy citizens

The French National Assembly rejected the left-wing proposal to introduce a property tax. 228 members of the Lower home voted against this proposal on Friday evening and 172 in favour. The Socialists threatened to overthrow the government last week if the draft budget did not include asset taxation exceeding EUR 100 million. Therefore, there is inactive uncertainty as to whether the Prime Minister's government Sébastiena Lecornu (39) get the required majority in Parliament to pass the budget for the coming year.

Zucman's tax, named after the economist Gabriel Zucman (39), would impose a taxation of at least 2% on assets counted in hundreds of millions. According to Zucman's calculations, the French State could gain up to EUR 20 billion per year from this tax; it stated that it would only cover 1,800 households throughout the country.

If there is no compromise, fresh elections can be held soon

Both the government and the right-wing opposition organization of the Rassemblement National reject the tax, arguing that it will affect the assets of the companies and, in their opinion, will have a negative impact on France as a location for business, leading to occupation losses. The National Assembly besides rejected a weakened version of Zucman's tax, which would exclude companies classified as household and "innovative".

After Zucman's taxation failure, the leader of socialists, Olivier Faure (57), stated that "there is no possibility" of voting on the draft budget in its current form. Faure besides advocated the restoration of the ISF property tax, which was abolished in 2017 and concerns assets worth at least EUR 1.3 million.

At the same time, he urged Prime Minister Lecorn and parliamentarians to proceed seeking a compromise – otherwise they would be threatened with a vote of distrust and a threat of fresh elections. No 1 on the left was afraid of fresh elections.

France's budget deficit is far besides high

Lecornu himself stressed that he was rejecting the proposal to introduce a property tax, claiming that there was no specified thing as a ‘marvel tax’. At the beginning of the month, Lecornu suspended the long disputed and already adopted pension reform, thus ensuring that socialist MPs would not vote in favour of the vote of distrust towards the government, as reported by left and right-wing populists in the National Assembly.

In mid-October, Lecornu presented his proposal for a budget for 2026, which assumes a simplification of the budget deficit to 4.7% of gross home product (GDP). To accomplish this, the government plans savings of EUR 17 billion and additional gross of EUR 14 billion. fresh loans of 5.4% are inactive expected this year. The EU deficit is now 3% of GDP. In fresh weeks, Fitch and S&P credit rating agencies decreasedFrance's credit rating due to its financial situation and political instability.