Good News and Bad News for 2013

The good news is that the highest court in France decided French President François Hollande’s proposed plan to tax the rich at 75% is unconstitutional. The highly controversial proposal was targeting earners of over €1 million, of which France has few, and therefore would only result in raising an estimated €100 million to €300 million when the national deficit is approximately €85 billion.

What’s interesting is that the court’s ruling didn’t take much issue with the high percentage of the tax, but with the way it was designed which was discriminatory. A household of two with combined earnings of over €1 million would be exempt, but if just one earned over €1 million, it would have to pay up.

Meanwhile, Hollande needs a lesson in marketing. The proposed tax which would do little to reduce the deficit has done a great job of driving out the country’s rich and deterring new business and investment in France, none of which is going to improve the mounting debt or the increasing unemployment rate.

How Hollande’s proposed tax plans and policies will affect property investors is the question. Personally, his lack of foresight is frightening, but usually, as the saying goes, ‘when one door closes, another one opens.’ In this case, the wealthy who are leaving are selling their property assets at a bargain, so this may be an advantageous time for foreigners to purchase (particularly large, luxurious) properties. For those considering doing business in France, if large companies do not see the benefit of opening new offices in France, then perhaps it’s an opportunity for smaller companies to find a less competitive niche.

As the ultimate optimist, I also believe that when the proverbial pendulum swings too far in one direction, it has to swing back, therefore Hollande’s extreme tactics are likely to backfire on him — evident event from this one blow to his plan. 

The bad news is another proposal by the Hollande administration that may backfire. If the French minister for energy and environment, Delphine Batho, has her way, lights in and outside shops, offices, and public buildings will be turned off between 1 a.m. and 7 a.m. beginning in July 2013. The plan would apply to all French cities, towns and villages with the idea to save energy and money while also showing “sobriety.”

In my opinion, this is another one of those ideas with total lack of foresight. How do you think the merchants and public, including tourists, will react to the city going dark? Imagine the Champs-Elysées going DARK. Imagine the Lido — lights out! Imagine Louis Vuitton’s beautiful window displays with lights out! And what do you believe you will be left with? Street lamps if you’re lucky, no place to spend your money and perhaps plenty of new-found thieves and criminal activity?

France the world’s number one tourist destination. According to an article published by Bloomberg.com tourism accounts for 6.5% of the GDP and employs almost a million people. Paris attracted 8.5 million foreign visitors “who stayed for at least one night in a hotel and spent an average of 146 euros ($191) a day” and while other cities may attract more (such as London and New York), France remains the most visited country with 81.4 million foreign tourists in 2011. (Download the official statistics PDF)

How is it they would consider threatening their position and money-making power? Do the lawmakers seriously not understand that in order to make money, they must move money. When money does not change hands, no one wins. Money is lost in the sheer stagnation.

Ex-President Nicolas Sarkozy vetoed the idea, but now it’s being given a strong push by our newly elected Socialist President. I liken his ideas of ‘sobriety’ to dieting to lose weight. You won’t lose weight by simply reducing your caloric intake as your body reacts by slowing your metabolism rate. But if you exercise and build muscle, then you get slim, trim, stronger and healthier. That’s the kind of plan that would make sense. And while everyone is getting poorer, thanks to rising unemployment, exodus of the wealthy, higher taxation, what do you think the darkness will do to the crime rate?

I have always felt very safe walking home late at night with such an abundance of lighting, not just from the street lamps, but because cafés are still open, store windows are lit displaying their wares and people are on the streets. What will happen to all that when these commercial entities are forced to shut down and flip the switch to total darkness? Who will want to come to Paris when they can have a real life 24/7 in other major European cities such as London, Berlin or Rome?

Those in the lighting industry say that only 10% of France’s consumption happens at night and therefore, this new ‘idea’ of austerity won’t make much of a difference to save energy while causing a long list of other problems. Again, I believe the outcry against this proposal will be heard and he and his followers will be left in the dark with limited solutions.

What we really need are some BRIGHT IDEAS and isn’t it funny that new ideas are symbolized by a light bulb burning bright, not switched off creating darkness? Let’s just hope that most of this administration’s ‘bad’ ideas will be thwarted with some good and bright ideas.

Happy New Year!

A bientôt,

Adrian Leeds
Editor, French Property Insider

Email: [email protected] 

 P.S. Don’t miss Parler Paris Après Midi this coming Tuesday, January 8th from 3 to 5 p.m. when Harriet Welty Rochefort, author, speaker and freelance journalist discusses “Putting some French Joie de Vivre into your life.” For more information, visit Parler Paris Après Midi