France’s New Wealth Tax

(Reuters) – France’s plans for a new wealth tax to help cut the country’s spiraling deficit will affect less than 1% of households, Budget Minister Laurent Saint-Martin said on Thursday.

The move is part of efforts by the euro zone’s second-biggest economy to balance the raising of taxes without scaring off businesses and wealthy entrepreneurs who create much-needed revenue.

“We are really talking about the very richest among the very richest,” Saint-Martin told France 2 TV, adding that households potentially subject to a wealth tax would have an income of 500,000 euros ($551,850) a year.

Prime Minister Michel Barnier this week stated he would reduce the budget deficit to 5% by the end of 2025 but that he would have to push back the target date for reaching the euro zone’s common 3% deficit goal to 2029 from 2027. France’s budget deficit is set to reach 6.1% of GDP this year.

Saint-Martin also reaffirmed special tax plans for the country’s biggest companies. He did not spell out precise details but noted that such companies would have annual profits of at least 1 billion euros.

France is targeting an overall 60 billion euro budget squeeze to rein in its deficit.

“Restoring public finances is going to have to be everybody’s business,” Saint-Martin told France 2 TV.

($1 = 0.9068 euros)