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Budget: the Senate validates the tax on high incomes and increases capital taxation
Senators voted on Tuesday, in the 2025 budget, the “differential contribution” on high incomes proposed by the government, but also adopted a series of measures against the advice of the executive to raise several taxes on capital such as “flat tax” and the “exit tax”. The afternoon started rather well for the Minister of the Budget, Laurent Saint-Martin, who saw the Senate validate almost without modification the tax on high incomes, supposed to bring in 2 billion euros per year until 2027. Unlike the deputies, who had decided to make this new tax on the wealthiest permanent, the upper house of Parliament adopted the initial version of the executive which limits its scope to three years , “until the taxation of income for the year 2026” the payment of which will therefore take place in 2027. The minister however said he was “open” to “maintain” this levy “as long as the the country's public deficit has not returned to 4%”, as he had already suggested two weeks ago to the National Assembly. On the other hand, he estimated that there was “no need to modify” the content of this “tax justice measure” which establishes a minimum rate of 20% on income above 250,000 euros per year for a single person and 500,000 euros for a couple without children. The attempts of the left, a minority in the within the upper house, to extend this “contribution” to the highest patrimonies have conversely remained in vain. “We know very well that these heritages largely escape taxation,” lamented socialist Florence Blatrix-Contat. – Damaged totems – In the process, however, the minister suffered a series of setbacks. First on the “exit tax”, a mechanism targeting capital gains created under Nicolas Sarkozy to deter tax exile, but emptied of its substance by Emmanuel Macron who reduced the deadline from 15 to 2 years. Duration only the senators decided to double at 4 years when the earnings come from a company having received at least 100,000 euros in public aid. “The time has come to correct a French tax avoidance system, particularly for the largest companies,” explained the centrist Bernard Delcros, whose group tipped the scales by rallying to the left to pass this amendment by 173 votes to 167. Same configuration a little later on another emblematic reform of the Head of State: the “flat tax”, also called “single flat rate levy” (PFU) and which caps at 30% since 2018 the drain on capital income, such as dividends or life insurance. Rate raised to 33%, by 174 votes from the left and center against 167 from the right and the Macronists. With an expected gain of 800 million euros according to the radical RDSE group, which supported the amendment. Third totem damaged: the real estate wealth tax (IFI), also put in place seven years ago to replace the former wealth solidarity tax (ISF). If the left has once again failed to restore the ISF, a broad consensus has emerged on all benches to rename the IFI “tax on unproductive wealth”, with a considerably expanded scope: building land, cars, yachts and planes, but also cryptocurrencies, savings accounts and bank accounts.gbh/ama/hr/dsa
France
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