To improve equity
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Published on September 26, 2024 at 3:46 p.m.
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Updated September 26, 2024 at 3:47 p.m.
In a report, the Court recalls that State revenue from inheritance taxes has increased by 137% since 2011 and proposes a reduction in tax advantages for certain inheritances.
The Court of Auditors on Wednesday considered it “possible to carry out a reform” of inheritance taxes, “one of the least well accepted taxes” by the French, to improve its “fairness”, provided that this reform is carried out “at constant yield.
Inheritance taxes, which aim to tax the inheritance received according to the amount and the relationship between the heir and the deceased, have a “redistributive function”, and are judged “favorably by economic theory”, explains the Court accounts, in a report presented Wednesday to the finance committee of the National Assembly.
– Revenues doubled in 12 years –
State revenue from these inheritance taxes “more than doubled between 2011 (7 billion euros) and 2023 (16.6 billion euros”, notes the institution, an increase of 137% in a decade.
But “a reform of inheritance taxes, if it were to intervene, would necessarily have to be carried out at constant income”, insists the institution in its report, the situation of public finances not allowing “any reduction in compulsory deductions which would not be compensated by savings in expenses.
Because “despite the growth in tax revenue, the inheritance tax base remains significantly reduced by measures (…) whose impact on public finances is poorly known”, recalls the Court.
The institution cites in particular the so-called “Pacte Dutreil” system, which allows tax advantages on the transfer of family businesses, as well as the tax regime for life insurance, “more favorable than common law”. These derogatory tax measures “de facto favor households with significant assets”, summarizes the Court.
– Fewer derogatory arrangements –
A possible reform could therefore be “based on a tightening of exemptions and a targeted reduction in rates, making it possible to improve the fairness of this tax”.
Despite the “serious economic justifications” for this taxation, it remains “poorly accepted in France, in the context of generally high wealth taxation”, also points out the Court. Above all, the institution highlights the “parceled” nature of the “quantified data relating to inheritance taxes”.
“In the absence of more precise and up-to-date data, it is difficult to precisely define reform scenarios,” she explains, advocating “the carrying out of a statistical study (…) before any legislative development”.
Inheritance taxation regularly comes up in the French debate. During the campaign for the 2022 presidential election, Emmanuel Macron proposed increasing the reduction on direct line inheritances from 100,000 to 150,000 euros, without subsequently carrying out this reform, and his opponent Jean-Luc Mélenchon, to establish a legacy maximum of 12 million euros.
AFP
