France to hammer the rich after £1.7bn wealth tax raid

France is poised to make a one-off wealth tax permanent in a bid to tackle spiralling national debt.

It comes as calls grow on Rachel Reeves to introduce a similar measure on the richest taxpayers amid Britain’s ballooning debt.

Economics minister, Eric Lombard, said on Sunday that a minimum 20pc tax on the country’s wealthiest introduced last year should stay for good.

The levy raised €2bn (£1.7bn) last year from households earning more than €500,000, which Mr Lombard told French media was “a lot”.

He said the government would consider ways to “maintain” the tax or “improve it”, and that there was “a question of financial resources”, and “a question of fairness”.

Mr Lombard added: “We are asking [for] a big effort from everyone.” He hoped “this contribution will be lasting”.

Labour has similarly been urged to turn to a wealth tax amid fears the Chancellor is running out of enough fiscal headroom to balance the public finances.

Around 30 Labour MPs and peers from multiple parties wrote an open letter in October calling on the Chancellor to introduce a tax on “extreme wealth” amid plans to raise £6bn from welfare cuts.

Dianne Abbott at the time said a levy of 2pc “on people with assets over £10m” would raise £24bn a year for the Treasury, which would mean Labour wouldn’t need to make such deep cuts to welfare spending.

France’s national debt has ballooned in recent years leading to higher taxes. It now accounts for 113pc of gross domestic product – considerably more than Britain’s – and rose by €202.7bn to €3.3 trillion last year.

The French government needs to find €40bn next year to reduce the public deficit by 4.6pc, and has called upon tens of thousands of high earners to pay more.

A minimum of 20pc has drastically reduced the extent to which wealthy French taxpayers can take advantage of tax breaks. It applies to sole earners with more than €250,000 a year and couples with a joint income in excess of €500,000.

The wealth tax in France was designed “to combat tax over-optimisation” according to the ministry of finance, whereby legal loopholes allow high earners to stack up tax breaks to pay less overall.

When the minimum taxation rate was brought in last year, France’s government said the “contribution” would be temporary, but this is now doubtful.

Mr Lombard insisted the wealth tax would continue to only apply to “high revenue” earners, ruling out a raid on the savings and asset wealth of the richest French taxpayers.

The country’s household savings are at a record high of €600bn, according to its national news outlets. As a result, money held in regulated savings is worth 15pc of France’s total assets.

Many ideas about how to impose more punishing taxes on France’s wealthiest are currently being considered by the country’s political class. Mr Lombard recently suggested increasing taxes on the wealthy to help fund a planned increase in defence spending in the coming years.

Meanwhile, France’s parliament recently voted in favour of a 2pc wealth tax on those with assets exceeding €100m. There are doubts the bill will be accepted by the French Senate, but the achievement has nevertheless represented a symbolic milestone.

Last month, Labour MP Emma Reynolds said that the Government would reject demands for a 2pc wealth tax “for the time being”, but did not rule out such a tax at future financial events.

Left-wing Labour MPs including Diane Abbott, Richard Burgon and Zarah Sultana, recently renewed calls for the levy as an alternative to Sir Keir Starmer’s plans to cut £6bn from the benefits bill.