Cap tax shelter schemes at €10k

A limit of €10,000 could be set on the amount of money French residents can store away from the tax man.

The government has promised to set a cap on the amount of money that can be invested in tax free schemes.

A report by the government’s financial commission earlier this year estimated that it is losing €73 billion to tax-free schemes. A figure that has risen along with the number of opportunities.

“On average nearly 14 new measures have been created every year since 2003,” said the report.

The decision comes as the government tries to push through the revenu de solidarité active an income support scheme financed by a 1.1% tax on capital earnings.

Budget Minister Eric Woerth said that the National Assembly would debate a “cap on total tax-free schemes” during the next parliamentary year.

The cap is a concession to MPs such as former minister Pierre Méhaignerie who asked why those most well-off in France were protected from paying towards the RSA by a 50% limit on taxation – the bouclier fiscal.

President Sarkozy had already stated that the RSA tax would also be subject to the bouclier fiscal.

According to Le Monde the tax-free cap could be set at €50,000 or as low as €10,000 with extra calculations for income. However the exact mechanisms have not been discussed.

Any such scheme would not be brought in until after the implementation of the RSA – currently scheduled for 2009.

While the tax-free cap is intended to help pass the RSA law, not all are convinced. Many MPs within the UMP party still believe that the €1.6 billion cost of the scheme could be met with further cuts in other areas of government spending.

Photo:Afp