French government under pressure over wealth tax proposal

French lawmakers debating the government’s proposed budget for next year on Saturday looked likely to put off discussion of a wealth tax being pushed by the left until next week.

France is under pressure to pass a spending bill by an end-of-year deadline to rein in its deficit and soaring debt, but efforts have been hampered by a political deadlock.

Prime Minister Sebastien Lecornu who has promised not to use a parliamentary tool employed by previous governments to force through unpopular measures, is under pressure from both the left and the right.

Lecornu, the country’s third prime minister in a little over a year, has promised to get the job done, after the legislature ousted his two predecessors over cost-cutting measures.

The right pushed through some of its measures Saturday evening, including eliminating taxes on overtime.

The left is still waiting to put its plan for a tax on the super-rich to the vote.

Lecornu himself survived a confidence vote earlier this month by agreeing to suspend a deeply unpopular pensions reform under pressure from the Socialists.

But the Socialists, a swing group in parliament, have also demanded a tax on the uber-wealthy, without which they have threatened to topple his government.

They originally requested a levy, named after French economist Gabriel Zucman, who hoped to raise around 20 billion euros ($27 billion) per year from just 1,800 wealthy households.

– The Zucman tax –

Zucman’s proposal was to make people with at least 100 million euros in assets pay a minimum tax of two percent on that wealth.

But the far right and Lecornu’s government are against taxing professional assets, which this levy would target.

The government instead wants to tax wealth management holdings with at least five million euros in assets.

The Socialists have now suggested a minimum three-percent tax on assets of 10 million euros and above, while excluding family and “innovative” businesses, in a concession to the government.

But in an interview due out Sunday in the Tribune Dimanche however, Budget Minister Amelie de Montchalin said it was out “of the question… to penalise entrepeneurs and to undermine our production capacity by taxing professional goods”.

The Socialists’ proposal had been due for debate in parliament on Saturday but now looks to have been pushed back to next week.

Zucman himself has warned the Socialists not to compromise on his original proposal.

Creating a tax “riddled with loopholes, offering opportunities for evasion… is condemning oneself to failure”, he told France Inter radio.

The radical left France Unbowed (LFI) party seized on his comments, to criticise the Socialists.

“There you have it,” wrote Eric Coquerel, president of the Finance Committee, on X.

“Everything has been said by Zucman himself about the Zucman light taxes on wealth proposed by the Socialist group in hopes of reaching a compromise with the government.”

France has been mired in political deadlock since President Emmanuel Macron last year called for snap parliamentary elections, hoping to cement his power.

His centrist bloc instead lost its majority and the far right gained seats, and the parliament ended up divided.