Sunday

3rd Jul 2022

France exploring tax harmonisation with Germany

  • France wants to scrap its wealth tax, as Germany has done (Photo: Fotolia)

France is looking to bring its fiscal system closer to that of Germany, French budget minister Francois Baroin has said after visiting his German counterpart Wolfgang Schaeuble.

"Germany is a model which should be a source of inspiration for us. The political consensus in the German society on reducing the deficits is quite spectacular," Mr Baroin said Wednesday (25 August), Les Echos reports.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

French President Nicolas Sarkozy intends to accelerate the harmonisation of both fiscal systems, on corporate as well as personal income taxes, the minister added.

Mr Sarkozy has requested the French court of auditors to issue a report looking at areas of fiscal convergence with the German system. The report is due by the end of the year, but a pre-report will be published at the end of September.

"In Germany, there is no wealth tax and no tax shield, but still their economy is flourishing. These are topics which are useful," Mr Baroin said.

Mr Sarkozy's government has introduced a "tax shield" capping the country's wealth tax at 50 percent of income, a move strongly criticised by the Socialist opposition.

Germany abolished its wealth tax in 1997, a tax on those earning above a certain threshold, after a negative ruling by the Constitutional Court. Just a year before, the German wealth tax brought in about €4.6 billion to the state coffers.

Harmonising tax systems is one way of closing competitiveness gaps within the eurozone which exacerbated the sovereign debt crisis earlier this year.

In the longer term, Paris is also looking at harmonising value-added tax (VAT), which is higher in France – 19.6 percent compared to the German 19 percent - while some services such as hotel and restaurant businesses are benefitting from more exemption in the French system than in the German one.

Mr Baroin also sought support from Germany on capping the EU budget, as governments are forced to slash their own spending and do not want to see an increase in their contribution towards the Union's coffers.

From the German side, Mr Schaeuble said there is consensus between the two capitals on seeking European harmonisation on bank profits taxation.

"We don't want to see a regulatory patchwork in Europe," a spokesman for Mr Schauble said, according to DPA.

A special meeting of finance ministers in September will discuss the matter further.

The German cabinet on Wednesday approved a bank restructuring bill, which includes plans for a bank levy, with proceeds going into a bank restructuring fund that would be used only in the event of future crises.

Berlin estimates revenues of about €1.2 billion a year from this bank tax, aimed at protecting the taxpayer from bailing out big banks, as was the case after the collapse of Lehman Brothers in 2008.

Green crime-fighting boss urgently required, key MEP says

The European Parliament approved last week a non-binding resolution on illegal logging, calling to extend the EU public prosecutor's mandate to also cover environmental crime. The lead MEP on the file has called for urgent implementation.

News in Brief

  1. EU Parliament 'photographs protesting interpreters'
  2. Poland still failing to meet EU judicial criteria
  3. Report: Polish president fishing for UN job
  4. Auditors raise alarm on EU Commission use of consultants
  5. Kaliningrad talks needed with Russia, says Polish PM
  6. Report: EU to curb state-backed foreign takeovers
  7. EU announces trade deal with New Zealand
  8. Russia threatens Norway over goods transit

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Nato's Madrid summit — key takeaways
  2. Czech presidency to fortify EU embrace of Ukraine
  3. Covid-profiting super rich should fight hunger, says UN food chief
  4. EU pollution and cancer — it doesn't have to be this way
  5. Israel smeared Palestinian activists, EU admits
  6. MEPs boycott awards over controversial sponsorship
  7. If Russia collapses — which states will break away?
  8. EU Parliament interpreters stage strike

Join EUobserver

Support quality EU news

Join us