French Introduce Tax Increase on Investment Income

French President, Nicolas Sarkozy, has announced a tax increase on investment revenue which will very likely lead to higher tax bills for non-resident homeowners in France.

His proposed plan is to introduce a 1% rise on share, property rental and other investment income.

Similar to critics of the government in Ireland, this has been signalled as the end of Sarkozy’s journey to cut taxes, which was a large part of his election platform. This saw the introduction of a reduced Inheritance tax rate last year but further tax reductions are unlikely judging by his current actions.

It seems some of Sarkozy's comerades are having trouble coming to terms with the new direction. Alain Lambert, a prominent senator and a member of Mr Sarkozy’s centre-right coalition, said: “I’m going to need a few minutes to understand why we’re raising tax on investment revenue when we brought down inheritance tax a year ago.”

Sarkozy hopes that the new 30% rate will generate over €1.5 billion in additional revenue each year. It is, allegedly, being used to get people out of the 'welfare trap', where French citizens are better off on the dole than they are in low paying jobs. Now where have we heard that before?

For further details click on this PTI Returns article. There is a more in depth report from the UK Times here.

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