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Wealth Tax Hits Poor Pensioners of Paris
Jon Henley in Paris, The Guardian
June 17, 2005
France
Bernadette thinks it is shameful. Never did the
76-year-old retired primary school teacher, who lives on a pension of
€800 a month, think she would find herself classed among France's
super-rich.
"I worked hard all my life, I saved for my retirement, and this is
what I get," she said, waving the form from the tax authorities.
"It's just terribly unfair. I'm not rich, just look at how I live.
All I have is this apartment."
Bernadette's apartment, however, is her problem. She inherited the faded,
three-bed flat in a fine Haussman block in Paris's chic sixth
arrondissement more than 30 years ago, and it is now valued at €1.2m (£800,000).
This means Bernadette is subject to l'impôt sur la fortune, or ISF, the
wealth tax levied on all French residents with belongings worth more than
€730,000. But, like growing numbers of pensioners in a similar
situation, she cannot pay it.
"I don't know where I'm expected to find it. Surely they can't expect
me to move?"
Her annual tax bill, nearly €2,000, represents almost three months'
pension.
Soaring property prices are creating tens of thousands of nominal
super-rich each year. According to the finance ministry, more than 335,000
people paid the ISF last year, nearly 90% more than in 1997. Some of those
being asked to pay exist on so little they are exempt from paying income
tax.
"The problem is particularly bad in Paris," said Marcel Ricard,
of the National Estate Agents Federation. "Over the past five or six
years, property prices here have been climbing by 15% a year. In some fast
improving areas, they've almost doubled since 1999 or 2000."
The north and east of Paris have seen prices surge at unprecedented rates
as even comfortably-off families find they can no longer afford to live in
the sought-after arrondissements.
Paris is not the only part of France suffering from the ISF, which raises
€2.7bn a year. Property prices in Marseille have risen by 80% in four
years thanks to a new, high-speed TGV line linking the city with Paris.
And on the Ile de Ré, an unspoilt haven off La Rochelle which has become
a favored summer retreat of the chattering classes, dozens of local
smallholders are having to sell off their land piecemeal.
Pensioners are plainly in trouble, but with economists estimating that
disposable incomes in France have fallen by as much as 20% over the past
few years, professional couples are also in difficulty.
Thierry Plantade, who in 1998 and for €345,000 bought a big four-bed
Paris flat, now finds it is worth €800,000. "I find it outrageous,
maddening, that just like that, someone decides we're rich," he said.
"This is my home, it earns me zero income."
A government spokesman said reform of the ISF was being discussed.
"But it's a very sensitive issue, particularly on the left," he
said. "And you know, these things can take a very long
time."
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