Rich tax breaks costs state €70b

Government report reveals 150 of France’s richest citizens pay no income tax at all.

France’s richest people are paying no income tax due to a web of tax breaks – costing the state €70billion.

A report compiled by a bi-partisan parliamentary committee reveals that tax breaks and incentives created over many years are spread unevenly between rich and poor.

"Among the biggest taxpayers, the higher the revenue, the less they pay in tax as a proportion," said the report, drawn up on the initiative of the National Assembly's finance committee.

In 2006 150 of the country’s 10,000 richest citizens paid no income tax despite declaring an average taxable revenue of one million euros, said the report.

Of the country's 1,000 wealthiest taxpayers, 116 managed to cut their tax bill by 93 percent, shaving off an average of one million euros.

In five years the number of tax breaks and incentives has risen from 418 to 486 with the cost to the state rising from €50 to €70billion.

The breaks range from employing home help, to reductions for certain occupations or for investing in French business and cultural assets.

The report’s authors said the government should put an overall cap on such tax breaks and for any new ones to be strictly monitored.

President Sarkozy has promised to balance the budget by 2012, two years after the Eurozone deadline.

Photo: sxc juhabee Juha Blomberg