French lawmakers okay wealth-tax cut, holiday-home tax

France's super-rich will pay less tax but foreigners with holiday homes will pay more under a bill French lawmakers approved on Saturday. The National Assembly held a marathon debate before putting the last few clauses of the politically charged bill to a vote in the lower house of parliament as dawn broke.
Several fiscal reforms are planned in the budget bill that now faces some lesser hurdles including approval in the Senate upper house in coming weeks before it can become law. It will end a "tax shield" scheme that helped the wealthier French by saying nobody should be taxed more than 50 percent.
It will at the same time lower the rate the super-rich pay in a wealth tax introduced by late Socialist President Francois Mitterrand almost 30 years ago, while removing some 300,000 affluent but not super-rich people from that tax net. Other changes in the bill include a tax on holiday homes of non-residents, many of whom are Britons.
Sarkozy won power in 2007 promising that tax would not rise. He is under pressure as the April 2012 election looms to fend off left-wing critics who say he helped a wealthy minority while sacrificing others during an economic downturn that has increased debt and the prospect of austerity for years to come. The changes to Mitterrand's wealth tax are set to raise the point at which it kicks in, sparing many people who are not hugely wealthy but became liable as the value of their real estate rose markedly in recent years.
Whereas people are liable now once the value of their assets hits 800,000 euros ($1.15 million), the new law raises the point at which people fall into the tax net to 1.3 million euros. But the bill also lowers the tax rate. The maximum rate of taxation would be 0.5 percent, whereas now it can be three times that or more. Many of France's super-rich invest heavily in works of art, which are exempted from wealth tax. The Socialist Party, whose likely presidential candidates are at this stage tipped to trounce Sarkozy in next year's contest, oppose the new law.