However apart from this change in the assiette (kinds of wealth that are eligible to be taxed) the other main elements remain in place in the draft version of the 2018 Finance Law (budget).
Wealth tax is levied on the value of possessions and France is one of a few places in the continent of Europe to still levy one. It came in under Mitterrand as Impôt sur les Grandes Fortunes in 1982 and has been subject to various modifications (and a brief removal). The current version is called Impôt de Solidarité sur la Fortune (ISF).
Some 150,000 wealth tax payers, 40% of households that currently pay, are expected to fall out of the tax as a result of the change and, on average, bills will be halved according to Mr Macron.
It means slashing the overall assiette by an estimated 49% and the tax is expected to bring in €3bn less (takings have been over €5bn in recent years), money the government hopes will be recouped by a boost to the economy. It is to be renamed Impôt sur la Fortune Immobilière (IFI).
The threshold remains in place (€1.3m) as do the bands and the 30% reduction on the value of the main home. The assiette will include the remaining 70% as well as the value of other real estate people own apart from business premises.
No longer included will be money in bank accounts or assurance vie polices, shares, boats, cars, race horses etc. However certain kinds of property-based investment schemes (SCPIs and OPCIs) will be taxable unless they are held within an assurance vie policy.
The aim is to encourage more wealthy people to invest in French businesses, creating wealth and jobs and to tempt back tax exiles (or stop them leaving).
The chance of reducing the tax bill by gifts to good causes remains, however a reduction for investing in small businesses – is to be removed.
The finance law’s rapporteur, MP Joël Giraud, praised Mr Macron for acting on his election promises in an interview with Le Parisien. How-ever he thought “symbols” of luxury should not be exempt. “A yacht is just about showing off, it’s not productive for the economy,” he said.
Prime Minister Edouard Philippe told France 2 “I make no apology: our objective is to make sure capital stays in France, even to attract people, including rich ones, to France.”