Macron, yachts, and the City

Despair on the French Riviera as Macron decides to actually collect taxes on fuel used by billionaires’ yachts, demands they make national insurance payments for their crew members.

Macron is often derided for being Napoleonic in both his style and his personal aspirations. Let’s not forget that Napoleon did in fact accomplish some great things as an economic and political reformer in a large part of Europe.

Taxation of yachts in the south of France, like everything in Europe now, has implications for post-Brexit Britain. We know that France – like Germany, the Netherlands, and Ireland – is working hard to peel off financial business from the City of London.

But the collection of taxes from visiting yachts may be a signal that Macron intends to crack down on cross-border tax avoidance by the rich and by corporations. If so, that would be a wonderful thing for fairness and for the public finances, but could do more damage to the City than any amount of competition from Paris. Banks, accountants, and law firms in the City do very good business arranging for others’ wealth not to be taxed; money hidden in tax havens and shell corporations around the world is managed from the City (for more information on that see the Tax Justice Network site).

There are powerful forces within Europe supporting international tax avoidance – it’s good business for Ireland, the Netherlands, Austria and Juncker’s Luxembourg, and of course the wealthy of all countries benefit from it – but also powerful forces against, because it damages the public finances of most countries and damages European cohesion (international tax avoidance had a big role in the collapse of Greece, for instance). Britain has always been the most powerful EU country that could be counted on to defend the tax avoidance business, and with Britain’s voice missing the bloc’s policies may tip toward tax collection. That would dry up a lot of City business, Brexit or no Brexit.

Meanwhile, yachts: if Macron wants to tax them without drying up this slice of Riviera business, he’ll put pressure on Spain, Italy and other Mediterranean EU states to collect those taxes as well. But until that happens, if you have a yacht to refit and can’t bear the prices in the south of France, please take your tub to my friends at Ruben DoƱaque – Specialist Welding in Palma de Mallorca.

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