Instead of tinkering with tax brackets, François Hollande should set about the task of reforming the whole fiscal structure
You call it a gaffe, we call it a couac (pronounced "quack"). It has even become the French right's favourite word to describe François Hollande's debut at the helm of the state. Every decision or new policy Hollande and his government has taken since the summerhas been presented by the opposition as "yet another couac". Most often than not groundless, this tactic is of course a way of undermining the presidency, trying to convince the French that the new government is a bunch of amateurs.
But to be fair, last Saturday's announcement by France's constitutional council that some of Hollande's fiscal measures had to be scrapped proved indeed a terrible blow and a deep embarrassment for the president. Among the measures deemed anti-constitutional is the now world-famous and highly symbolic 75% tax rate for incomes above €1m. Why did the council consider Hollande's measure invalid? Simply because it stipulated that any individual earning more than a €1m a year would be taxed 75%, and whoever penned the bill didn't seem to know the basics of French fiscal principles; they should indeed have known that the French system taxes households, not individuals. The way Hollande's measure was drafted meant that a household where both partners each earned €900,000 would not be taxed, while another where one partner earns €1.2m and the other nothing would be. "A work of amateurs!" shouted Le Figaro's editorial. For once, they had a point.
Hollande should have been particularly meticulous, especially as his measure was purely psychological. Indeed, the 75% tax rate only applies to 1,000 or so households, and would not have reaped more than €210m a drop in our public deficit ocean. It was never going to be the magical solution to endemic public debts – it was always going to be a symbolic measure. The message was simple: in time of crisis, the rich have a duty to help in the name of solidarity and patriotism.
For the time being, the government is busy trying not to lose face. The prime minister, Jean-Marc Ayrault, recently declared that his government would submit a redrafted bill at the end of 2013. However, the fact that they could actually resubmit it in a matter of weeks, rather than drag the affair out for another 12 months, has many commentators in France wondering whether Hollande is simply biding his time, secretly hoping to ditch it later on.
To make matters worse, France's fiscal uncertainty is not conducive to serenity. Famous fiscal exiles like Gérard Depardieu, who has chosen to go and live in Belgium to escape France's tax regime, have made it quite clear that 75% tax or not, they won't be coming back to France any time soon. With the Economist and Financial Times repeatedly tagging France with the unhelpful "this country doesn't like the rich and will tax you to hell" line, Hollande has a lot to worry about.
Instead of adding new tax brackets here and there – to the point of making the whole French tax system almost unfathomable – many think Hollande should do what other presidents have failed to do: reform the whole fiscal structure. Once he has done this, a monumental task that requires skill and courage in equal measure, we can then think of getting Gérard back home.
Source: http://www.guardian.co.uk/commentisfree/2012/dec/31/france-tax-francois-hollande
analysis and opinion Anand Patwardhan Anastasia Blue ancient
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