Raising the threshold of relief from inheritance tax is one of the very few measures all candidates in the French presidential elections agree on, although they vary in their amounts proposed. EURACTIV France reports.
Inheritance tax “could play a stronger role in reducing inequality and improving public finances”, the OECD said in May 2021.
France’s current tax regulation affects only 15% of inheritances, France Stratégie, an institution linked to the prime minister, said in 2017. In other words, only the wealthiest estates. The tax affects direct lineal descendants and exempts surviving spouses and – partially – their children.
Increase in the tax threshold
Almost all candidates in the presidential race propose an increase, of varying ranges, of inheritance tax relief. It currently applies to sums or donations above €100,000.
Socialist candidate and Paris Mayor Anne Hidalgo said she wanted “nothing to be paid by 95% of French people”, and proposed to exempt inheritances below €300,000, the same figure as far-right candidate Marine Le Pen, with regard to real estate.
President Emmanuel Macron, who is up for re-election, also wanted to raise the current rate, but only to €150,000.
Green candidate Yannick Jadot, right-wing candidate Valérie Pécresse and far-right candidate Éric Zemmour all proposed that the figure goes up to €200,000.
Radical-left candidate Jean-Luc Mélenchon was the outlier in his proposals, instead suggesting to keep the current exemption threshold and instead tax entire inheritances exceeding €12 million.
Some nuances
Despite some similarities, the programmes of each candidate reveal certain nuances.
Most left-wing candidates want to abolish some tax loopholes that allow the wealthy to partially escape payments. Communist candidate Fabien Roussel, for example, is calling for a total ban on such loopholes as they “outrageously favour the rich”.
Jadot is proposing a more progressive scale than the one currently in place, with a view of increasing taxes “for the 13% of French people who receive the largest inheritances”, and lowering them for the others. Hidalgo, for her part, is also expected to propose a higher tax rate for assets above €2 million.
However, right-wing and far-right candidates intend to make exemptions more regular for life-long transfers. For example, Pécresse proposes that no tax should be paid on transfers of up to €100,000 every six years, while Le Pen proposes this should apply every 10 years – instead of the current 15.
Far-right candidates Nicolas Dupont-Aignan and Zemmour expressed their wish for the transfer of family businesses to also be favoured. While Dupont-Aignan said he wants an exemption of up to 90% of the value of the business, Zemmour supported the tax being abolished altogether. Similar measures are proposed for the inheritance of agricultural land.
French right-wing accuses Macron of ripping them off
Right-wing Les Républicains candidate Valérie Pécresse and her supporters have criticised French President Emmanuel Macron for plagiarising the right’s programme ahead of the upcoming presidential elections.
Adapting to changes in society
To take account of changes in society, both Macron and Pécresse plan to broaden the range of people eligible for the exemption, which until now has only concerned the children of the deceased up to €100,000 and the surviving spouse for the entire estate received.
The new exemption would then benefit indirect heirs like nephews, nieces and cousins, who today pay significant taxes, sometimes up to half of the inheritance received, when they are liable for this tax.
Thus, while most economists and economic analysis institutes advocate a broadening of inheritance tax to fight inequalities, almost all candidates actually propose to reduce it for an even greater number of French people, with the exception of Mélenchon.
Similarly, their programmes propose technical and targeted measures, but only marginally aim to fight against the tax optimisation that the wealthiest households implement.
All you really need to know about the French presidential election
On 10 and 24 April, the French will go to the polls to choose the president of the republic for the next five years.
[Edited by Nathalie Weatherald]
Source: euractiv.com
