“I do not rule out greater tax justice”. The day after his arrival at Matignon, Prime Minister Michel Barnier broke the taboo of a possible increase in taxation in France. Totem of the outgoing Minister of the Economy, Bruno Le Maire, the reduction of taxes on households and businesses is clearly a marker of the budgetary policy of the last seven years led at Bercy. The new head of government has however remained relatively vague on his real intentions in terms of taxation until now.
Budget 2025: Michel Barnier’s big leap into the unknown
In the context of drained public finances, the Barnier government is looking for public revenues and cuts to try to reduce the public deficit. Expected at 5.6% of GDP this year – against 5.1% previously -, the budget balance of France is sinking into crisis. HAS With the approach of the presentation of the 2025 Finance Bill (PLF 2025) in early October, the pressure is increasing on the tax levers to be activated. After the general inspection of finances at Bercy a few days ago, it is the turn of the NGO Oxfam to point out the tax loopholes favorable to the largest inheritances applicable in France.
160 billion euros of lost revenue
” Taxing super inheritances is an important democratic debate “, underlines Cécile Duflot, director of the NGO. ” There is a budgetary headache and the debates are mainly about the cuts. The debate on revenue is very difficult. “, regrets the former Minister of Housing.
Pointing to ” lack of transparency on the figures “, she believes that ” The government is burying the debate on inheritance tax issues. However, this could be a significant Source of income for the state “.
In its report, Oxfam calculated that the shortfall in public finances would be 160 billion euros if France continues to apply its current tax system.
” In the next 30 years, 25 French billionaires will pass on to their heirs more than 460 billion euros in super inheritances, on which the State risks losing 160 billion euros due to existing tax loopholes, if nothing is done about it. “, warns the organization.
In its report, the organization points out that the top 0.1% of heirs earning 13 million euros only pay around 10% in inheritance tax. This inappropriate taxation is at the root of growing inequalities between the French. “, the report insists.
“One of the taboos is the Dutreil Pact »
The cause is the various tax loopholes and exemptions. The authors of the report criticize in particular the transfer of life insurance policies, the amounts of which are not included in the estate assets shared between the heirs. Life insurance contracts “now allow in certain cases to transfer up to 152,000 euros to the person of one’s choice without paying taxes, and to be taxed at a rate of only 20 or 31.25% on the remainder”The estimated losses for public finances reach between 4 and 5 billion euros, according to the Economic Analysis Council (CAE), attached to Matignon.
Among the other tax loopholes in the crosshairs is also the Dutreil Pact. This mechanism allows for the exemption, under certain conditions, of up to 75% of the transfer of company shares or stocks. One of the taboos is the Dutreil Pact “, considers Layla Abdelké Yakoub, principal author of the report.
” It may be justified on small businesses but it may seem strange on billionaires. ” she adds.
On the Dutreil Pact, “It’s the icebreaker strategy”regrets Cécile Duflot. Criticizing the multiplication of exemptions, she considers that “The consulting firms lobbied hard at Bercy. That’s why it’s a scandal.”. On the loss of earnings, ” The administration gives the figure of 500 million euros every year. However, this figure is not updated. It is incomplete. Economists have shown that this had a cost of 3 billion euros “On the Dutreil Pact, the organization proposes a cap of 2 million euros.
2025 Budget: the Dutreil pact, a less than obvious savings option
Taxation of inheritances: a consensus among economists…
From the Economic Analysis Council (CAE) to the OECD, many organizations are calling for increased taxation on the transfer of wealth by the richest. At the forefront of this issue, the former director of taxation at the OECD, Pascal Saint-Amans, has long led this battle within the international institution.
“The excessive concentration of wealth without rotation, which itself feeds inequalities, is economically inefficient and undermines the cohesion of societies,” declared the economist in 2021, now a professor at HEC.
In a report commissioned by Emmanuel Macron and submitted in 2021, economists Jean Tirole and Olivier Blanchard also advocated for an overhaul of inheritance taxation in France. This position is not surprising, since the current inheritance tax system favors rents and calls into question the spirit of competition for these economists close to Macronist circles.
As for the economist Thomas Piketty, he has shown in numerous works that inheritance taxation in France has favoured wealth inequalities much more than income inequalities.
Thomas Piketty: “It is because we have reduced inequalities in health and education that we have experienced greater prosperity”
…but a politically flammable issue
While there is certainly consensus among economists on increasing taxation, this is far from being the case in political circles. In its economic program presented last weekend, the National Rally (RN) proposes to transform the property wealth tax (IFI) into a financial wealth tax (IFF). This tax ” aims to encourage the mobilization, in the service of the real economy, of financial savings which are currently unproductive “, underlines the nationalist party.
But the RN has already planned numerous exemptions on main residences, professional assets or works of art acquired for at least ten years. How can we explain such reluctance of politicians to tackle this issue? Nine out of ten French people do not receive an inheritance. There is a real smokescreen over the debates “, denounces Cécile Duflot to The Tribune. Deemed unpopular by many politicians, ” Inheritance taxation should not be just a debate between technicians. It is also a debate about tax justice. “, insists the director of the organization. It remains to be seen whether the next Minister of Economy will dare to put this sensitive debate on the table.
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