Saturday, 29 December 2012

Hollande's confiscatory '75%' and other milk the rich policies are getting their predictable commuppance

Hollande imitates a man of state
I think that rich people should be made to pay much higher taxes than they do now and that it's more than time that the markets, banks, hedge funds and all the rest of those money-spinning schemes for the rich should be taxed more, and I believe that tax rates on major companies (but not small ones) are outrageously low. Finally, I and most other people living in France would like to see Hollande succeed in taking concrete and efficient action to ensure these measures are taken.

But I also consider that waging an unfair, discriminatory and confiscatory - in other words illegal - fiscal war on any section of the population, including the rich, is not the way to go about taxing citizens in a democratic country, and nor is it efficient, as three recent examples have made more than obvious.

Hollande and his government have been ferociously intent on hastily and ill-preparedly trying, and failing for various reasons, to enact such laws ever since they came to power, and today saw Holland fail yet again as the French Constitutional Council threw out his most emblematic proposal, that of taxing the rich at 75%.

The Council rejected the measure for the very two reasons that most level-headed people have been saying it would for months. It was ruled to be confiscatory and thus illegal (the last time confiscatory laws of this amplitude were enacted was in World War Two during the Occupation of France, when they were applied to Jews only), and the Council also decided that it did not affect households equally because of its excessively one-sided effort to raise tax revenue. The council also refused a proposal for a 75% tax on complementary retirement pensions and two more minor measures because they too were confiscatory.

In other words, these proposed measures, which so pleased left-of-centre voters during the election campaign and thus got Hollande elected, have been reduced to political dust and the government will have to start all over again with a new and less discriminatory policy. That means we will have to wait for oh, four months at least whilst they go back to the drawing board and come up with something that is actually legal in constitutional terms.

Meanwhile, the rich will continue to pay more or less the current, much lower, rate of 45%. What a fiasco and what a waste of precious government time given the urgency of the need for tax reform. It was a ham-fisted effort to bludgeon discriminatory legislation into existence against all common sense which has already seen thousands of badly-needed tax euros disappear abroad with their owners. And the cherry on the cake is that even if they had gone through, these measures would have resulted in no more than a few hundred million euros of revenue - a drop in the ocean of the country's debt.

The second example of this administration's stubborn refusal to put its brain into gear before putting its mouth into motion concerns Minister for Industrial Renewal and polical loose cannon Arnaud Montebourg's attempt to renationalise a sprawling steelworking facility owned by the Mittal conglomerate and comprising several separate steel-related activities. He tried this on because he didn't like what the company's chairman was planning for the future, which he believed (wrongly as it turned out) involved massive layoffs.

This harebrained idea was also decided in great haste, essentially by Montebourg alone, and it too was judged to be potentially legally impossible because of its spoliatory and discriminatory nature. Not only that, both Hollande and PM Jean-Marc Ayrault were warned that it would send out a disastrous message to foreign investors at a time when France desperately needs them, so they put the kibosh on it and did what they should have done in the first place, which was to come to an agreement with the company's owners. Montebourg was furious and is now being touted as a possible contender for replacement in the next government reshuffle, particularly if he continues to decide policy alone and on-the-hoof, which is probably why we haven't heard a peep from him since then.

The third example involves housing the homeless, particularly during winter, and thus it was that Minister of Territorial Equality and Housing Cécile Duflot woke up one morning a few weeks ago to announce to a waiting world that she was going to implement a policy of government requisition of empty houses and business premises which have been empty for over 6 months and put homeless people in them. Brilliant! Except that it wasn't.

Most of this kind of property is owned by the rich or big companies, and as French law only allows this kind of measure in cases of 'national emergency' it soon became clear that it wasn't going to fly and that there may even be grounds under these conditions for the buildings' owners to contest the decision on the grounds that this situation is not a 'national emergency' and could thus be ascertained to be, yes, you guessed, spoliation. Again.

The government also realised, weeks after announcing the plan, that it was fatally flawed in many other areas. These properties would have needed massive investment (particularly office premises) to adapt them to human habitation, many of them are not situated in areas which are suitable for those who would live in them (too far from work sources and other facilities), the plan would have necessitated a whole infrastructure of administrative staff to oversee the project and select candidates etc and, most importantly, the procedure as it stands takes months. Even housing associations said that this was not a substitute for a housing policy.

All of which explains why a humiliated Duflot was forced to announce yesterday that she was abandoning the idea just weeks after coming up with it because the procedure would take too long as it couldn't be shortened without being unconstitutional and that "no senior politician can break into a building with a crowbar. The state is subject to the rule of law."

Another climbdown, another reversal, another waste of time which has pushed back efforts to help the homeless and another reason to think that this government seems incapable of creating policies which oblige the better off to help which are not totally over the top, illegal, and immoral.

It's high time this government abandoned its ideological hit-the-rich attitudes and began legislating not to please popular sentiment for relatively paltry sums of tax revenue but in order to do what is possible, as in legal. This government is wasting far too much preciously-needed time in its vain (in both senses of the word) efforts to legislate the impossible.

My dad used to say that "you're better off with 75% of something than 100% of nothing."

He was right.

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