The idea seems unthinkable and yet it could well concretize in France where public spending and public debt respectively account for 57% and soon 100% of GDP. It was initially only a rumor spread by some think tank members like Terra Nova’s close to the Socialist Party (PS) of incumbent President François Hollande.
Now that his former adviser and Economy Minister, Emmanuel Macron, is leading in the polls to succeed him on May 7, 2017, French real estate owners could be taxed on the “fictitious rents” of their main residence. While they are already paying a property tax that increased significantly in recent years, sometimes doubled or so in suburban areas of major French cities, owners will no longer be real owners.
Indeed, according to the economic proposals of Emmanuel Macron’s En Marche (EM) political party, current tax revenues will likely prove insufficient to finance the increase in public spending already at a record level.
As a result, 58% of French households who have been taxed on their real income and have repaid their mortgage with interest will have to pay taxes on “fictitious income” simply because they own rather than rent – a “privilege” according to Emmanuel Macron’s advisers.
According to analysts, such taxation would constitute a major obstacle to France‘s development and economic growth, in addition to spurring further increase in public deficit. Since the property tax is already an automatic taxation of real estate ownership, doubling it by another tax would be a serious tax precedent in a developed country.
France would suffer irredeemably from a de facto disappearance of the right of ownership and plunge its fragile economy into a hazardous experimental process.