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Banks warn share tax hike threatens Paris' post-Brexit appeal
[PARIS] A proposed increase in France's share tax flies in the face of efforts by the government and the financial industry to lure banking jobs from London, financial sector lobbies have warned.
In a first reading of the 2016 budget bill, lawmakers in the lower house of parliament backed an increase in the tax to 0.3 per cent from 0.2 per cent as well as its extension to cover intra-day trading. "This is also a bad signal that we are sending in the context of Brexit as for the attractiveness of the Paris financial centre," Philippe Brassac, head of the French banking federation and chief executive of France's third-biggest listed lender Credit Agricole, told Reuters.
Although the Socialist-led government had not included the increase in the original bill, it backed lawmakers' amendments to introduce the increase.
There is no guarantee that the amendment will enter into law as it must also be backed in the conservative dominated Senate and in a final reading before the lower house.
Budget Minister Christian Eckert estimated during the debate that the tax would raise additional tax revenue of 500 million euros (S$758 million), but acknowledged that it was unknown how investors might react.
The proposals would increase French companies' financing costs, Mr Brassac added.
The French government aims to attract businesses leaving London following Britain's decision to exit the European Union with plans to fast-track the registering of firms and extending tax benefits expatriates can qualify for.
However, France's comparatively high taxes remains an obstacle as does the Socialist government's support for a long-stalled financial transaction tax in 10 EU countries - which would replace France's existing share tax.
French financial lobby Paris Europlace hopes there is still a chance to reconsider the decision to hike the share tax. "This is a bad message and it is the opportunity for Paris Europlace to point out the strategic issues," Arnaud de Bresson, chief executive, told Reuters.
First proposed by the conservative government of ex-president Nicolas Sarkozy, the share tax was modelled on Britain's stamp duty, which puts a 0.5 per cent levy on stock purchases.
It applies to share purchases on companies with a capitalisation of more than 1 billion euros.