Tax cap on rich to be scrapped

THE BOUCLIER fiscal tax cap, which stops people paying more than 50 per cent of their income in tax, is to be scrapped in the latest financial reforms announced today by Prime Minister François Fillon.

The prime minister announced this morning that the bouclier, a flagship election policy of Nicolas Sarkozy, is to be scrapped.

The bouclier had become unpopular with politicians on both the left and right, who see it either as protecting the rich from taxation or an obstacle to wider tax reform.

As well as removing the bouclier, the PM announced that reforms to France's wealth tax (impôt de solidarité sur la fortune) would remove 300,000 households from paying it.

The tax will not be scrapped, said the PM, but future reforms would prevent households from paying wealth tax just because of the increasing value of their house. However the exact mechanisms were not specified.

Households with a value of less than €1.3m will not be subject to wealth tax.
Savings in tax-free Livret A accounts and the assurance-vie of small savers would be spared from extra taxation, announced the PM.

He added that there would be no additional income tax bracket for high earners, nor a capital gains tax on the sale of principal homes.

Jérôme SALORT - Fotolia.com