French Billionaires Call For Higher Taxes

August 23, 2011Sectorby EW News Desk Team

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Some of France's richest people, including L'Oreal heiress Liliane Bettencourt and the head of oil giant Total, have signed a petition to pay more tax following U.S. billionaire Warren Buffett's call to raise taxes on the super-rich, urging the French government to do more to help solve the country's financial problems.  

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According to a report by the Telegraph, the petition published on the website of weekly magazine Le Nouvel Observateur yesterday by 16 company executives, business leaders and “wealthy citizens” called for the creation of a “special contribution” from the country’s biggest earners — one that would remain “reasonable” so as not to see billionaires fleeing France for overseas tax havens.

Signatories included Christophe de Margerie, head of oil giant Total and the 89-year old Miss Bettencourt, Europe’s richest woman, who last year faced an investigation for failing to declare £68 million in Swiss bank accounts to tax authorities.

Their call followed Warren Buffett’s campaign for US authorities to raise taxes on himself and other ultra-high earners to fill state coffers.

Related: Warren Buffett: I Want To Pay More Taxes!

The call comes amid widespread recriminations against France's wealthy that they benefit from the country's generous welfare system but give little in return. In June, Prime Minister François Fillon said he was "shocked" by the "exorbitant" remuneration some companies paid to their top executives.

The message issued by the informal club of wealthy French could provide Mr. Sarkozy with an escape route from earlier fiscal promises, said the Wall Street Journal

After an agitated summer break, during which France was swept up by the broader reassessment of the credit-worthiness of highly indebted industrial nations, sparking questions about whether it can retain its prized triple-A credit rating, Mr. Sarkozy is expected to announce a series of austerity measures on Wednesday.

To stick to deficit-reduction targets and make up for softer-than-expected economic growth, the government is mulling additional budget savings of as much as €4 billion ($5.7 billion) for this year and €10 billion for 2012, according to union officials who have spoken by telephone about the matter with Prime Minister Fillon.

Government officials said the austerity package will likely also include a tax on wealthy households, though they remained evasive on whether the new levy would apply to annual revenue exceeding €150,000, €300,000 or €1 million.

"It's likely to be cosmetic and symbolic," said Philippe Aghion, a professor of economics at Harvard University, who is French. "I don't expect Mr. Sarkozy to fundamentally change his fiscal policy."

For Mr. Sarkozy, the issue is particularly sensitive: He was elected in 2007 in part by promising to protect high-income households from France's high income and payroll taxes. Soon after taking office, the president introduced a "fiscal shield" intended to protect wealthy households from paying more than 50% in taxes on their overall income. At the time, Mr. Sarkozy said the measure would help curtail an exodus of rich families to neighboring tax havens and "reconcile France with the idea of success."

With the financial crisis, pressure rose on Mr. Sarkozy—who has earned the nickname "bling-bling president" for his expensive watches and beach holidays—to recast his fiscal policy. Political analysts said he would be taking a risk if he were seen to be siding with the privileged during hard times, particularly ahead of the spring 2012 election in which he is widely expected to seek a second mandate.

The text of the call issued this week by a group of French wealthy individuals in weekly magazine Le Nouvel Observateur:

"We, chairmen of companies and business leaders, business men and women, finance professionals or wealthy citizens, call for an exceptional levy that would target France's richest taxpayers.

This exceptional tax should be calculated in a reasonable way and designed so as to avoid undesirable effects, such as capital outflows and an increase in tax evasion.

We are aware of the fact that we have benefited from a French model and a European environment which we are attached to and which we want to help preserve. This tax is not a solution in itself: it must be part of a wider reform of the tax system, encompassing spending as well as tax receipts.

At a time when rising public debt and deficits are threatening France's and Europe's future, and when the government is asking everyone to show solidarity, we feel we must contribute."

Who Signed On

Jean-Paul Agon, chairman and CEO of L'Oréal

Liliane Bettencourt, shareholder in L'Oréal

Antoine Frérot, CEO of Veolia Environnement

Denis Hennequin, CEO of Accor

Marc Ladreit de Lacharrière, chairman and CEO of Fimalac

Maurice Lévy, CEO of Publicis

Christophe de Margerie, CEO of Total

Frédéric Oudéa, CEO of Société Générale

Claude Perdriel, owner of Le Nouvel Observateur magazine

Jean Peyrelevade, president of Leonardo & Co. France

Franck Riboud, chairman and CEO of Danone

Stéphane Richard, chairman and CEO of France Télécom

Louis Schweitzer, chairman of Volvo and AstraZeneca

Marc Simoncini, founder of Meetic and Jaïna Capital

Jean-Cyril Spinetta, chairman of Air France-KLM and chairman of Areva's supervisory board

Philippe Varin, CEO of PSA Peugeot-Citroën

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