Sarkozy’s finance bill on the table

NEW President Nicolas Sarkozy’s €11 billion “masterbill,” which could revolutionise the French economy, was debated in July. The eight-chapter tax and finance bill is aimed at “shocking” the French economy back to life.

The bill seeks to exempt overtime work from taxation, make mortgage interest rates tax deductible and almost eliminate inheritance tax. It would also cap personal taxation at 50% - down from 60% - in a bid to reduce the “capital flow out of France.”

Carrying out the bill would cost the government six billion in lost overtime tax revenues, three billion from housing and 1.7 billion from inheritance tax.

Sarkozy’s plan is to drive up consumer spending, boost economic growth and reduce the country’s 8.2% unemployment rate, one of the highest in Europe. The key plank in the new bill is the proposal to exempt overtime work from taxes and social security charges, which are seen by many employers as a crippling disincentive to hire. This would undermine the 35-hour working week introduced by a previous Socialist government, without taking the step of scrapping it entirely.

The bill also proposes tax credits of 20% of the interest paid for the first five years of mortgage repayments.

Sarkozy also wants to triple the amount of money parents can give tax-free to their children while still alive or as inheritance.

The bill also seeks to scrap inheritance tax for surviving partners, which would bring France in line with most other European countries. More than 90% of the French population would no longer face high tax bills for inheriting property.