The BBC reports this morning that:
French President Francois Hollande has called for "eradication" of the world's tax havens and told French banks they must declare all of their subsidiaries.
He was speaking after presenting a draft law aimed at "moralising" French public life - a response to the tax scandal that has shaken his presidency.
France's ex-Budget Minister Jerome Cahuzac has been charged with fraud over a secret Swiss bank account.
Mr Hollande said a new central agency would fight fraud and corruption.
Of course Hollande is reacting to a domestic crisis. Of course this is rhetoric. And of course we've heard it all before. That's the cynic speaking.
And yes, I do think that this time it is a little different. First, Hollande has been badly hurt, personally, this time. he has strong reason to deliver.
Second, in 2009 when Gordon Brown almost said such things it was novel and unknown territory. Now it is familiar and reflects the zeitgeist the Tax Justice Network and others have created.
Third, the methodologies to deliver are now becoming clearer to those in power, even if, again, they've all been on the Tax Justice Network agenda for years. So, country-by-country reporting is being demanded for banks (and will be delivered in France and across Europe). Full, automatic, multilateral information exchange is being demanded and can be delivered. The G8 will address corporate tax reform, albeit subject to the enormous limitation that corporate capture of the OECD imposes.
Fourth, the political will exists worldwide. And I don't just mean amongst politicians, I mean amongst people.
The environment for change and the environment in which the curse of tax haven fraud and abuse can be eliminated has been created.
It will happen. Not overnight. but it will happen.
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Fifth, to be fair to Fran̤ois Hollande, this is not simply a knee-jerk reaction to recent events. Action against fiscal fraud and tax havens has been part of his announced programme from the start Рand I still believe he was sincere. France has been at the forefront of the ongoing negotiations in Europe. At a national level, the effect of recent events has been to strenthen and to accelerate actions which, for the most part, were already in the pipeline. It will now I think be more difficult for the right to oppose the necessary measures, though they will certainly do their best.
Time alone will tell. People are losing patience, but I for one have not yet given up on François Hollande. And maybe M Cahuzac has unwittingly done us a great service!
Why is the 75% tax rate causing a fuss in France? people like the ghastly Depardieu and footballers seem to want to flee it. Why not let them go? hardly a ‘brain-drain’ as the mental state required to cause such an exodus indicates an absence of the grey matter in anycase!
This is a ‘marginal’ tax rate rather than flat rate, isn’t it!!!!!!!
Yes, it is a marginal tax rate. The trouble is that few of those taxed at that rate seem to be intelligent enough to understand what a marginal tax rate is…
For anyone here who doesn’t know: a marginal tax rate means that you only pay that rate on that part of your income (less allowances) that is above the starting threshold for that rate. So, if you’re earning £100,000, your allowance is £8,000, income tax starts at 20%, and there’s a higher rate of 40% payable on income over £32,000 above your allowance (these are not current UK thresholds, they’re simplifications) you pay:
0% of income up to £8,000 = £0
20% of income from £8,000 to £40,000 = 20% of £32,000 = £6,400
40% of income from £40,000 to £100k = 40% of £60k = £24,000
—-
Total = £30,400, or 30.4% of your income
Far too many people – both those that do, and those that do not, pay those rates – think that a 40% higher rate means they pay 40% of their total income as tax. It doesn’t. That would be unfair, if the first £1 of extra income above the threshold attracted a huge effective rate. The use of marginal rates tends to smooth the curve out. It also means that the actual percentage of income paid as tax (OK, assessed) tends toward, but never actually reaches, the top rate, as income increases.
This has the interesting effect of making National Insurance payments tend toward a value of 1% of income…
The step increases are used in assessing Stamp Duty Land Tax, and it has the disincentive of people adjusting the property value (by, for example, overvaluing fixtures and fittings) to keep the purchase price below the next threshold. SDLT should be assessed using marginal rates to avoid this – and HMRC should investigate valuations of fixtures and fittings, or assess SDLT on the entire purchase price. (Just another example of fiddling the tax base.)
France has its own “offshore” tax haven in the form of Monaco. Let’s see how hard they go after it.
At the risk of seeming Xenophobic, I’ll believe it when I see it. Its a deeply corrupt country.