Great wealth transfer: Inheritance unequally distributed':

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00:00welcome back you're watching france 24 coming up to fewer public holidays a freezing of non-defense

00:07spending in 2026 francis prime minister unveils plans to fill a nearly 44 billion euro shortfall

00:14in next year's budget also by whose minority government could fall when parliament picks up

00:19the matter in the fall we'll be asking our politics editor mark perlman about that we're

00:25also joined in this edition by economist tio iberkan thank you for being with us in other news

00:32eu states failing to adopt a new round of sanctions on russia with slovakia playing the spoiler the

00:38bloc's foreign minister is also huddling on their response to a threat of 30 percent tariffs by the

00:43united states correspondent dave keating in brussels has the latest global warming well up to a point

00:50it's still cool conditions for the annual north pole marathon selena sykes will be here with all of the

00:57today's sports news wanted 43.8 billion euros to fill france's huge budget deficit the prime minister

01:21is spelling out some of the measures that he's considering francois bairou uh speaking as uh parliament

01:30currently is in recess he has a minority government which could fall uh once he puts these measures

01:38uh up for a vote they include freezing non-defense uh uh non-defense spending for the year 2026

01:49the next step our country's debt now stands at over 3 300 billion euros that's 114 percent of our

02:06annual national product which means that this debt represents more than a year's worth of everything

02:11our country has produced in all its agricultural industrial intellectual commercial health and care

02:17activities the debt exceeds it by at least two whole months and the more the debt increases the more

02:24it's a double-edged sword

02:25la dette le d'epasse de au moins deux mois entier

02:31et plus la dette s'accroît plus c'est la double peine

02:37mark proband for those who don't know him france's prime minister is a veteran of french

02:43politics and he has said that uh this is the fight of his life this uh budget battle

02:50uh the french uh don't like budget deficits but they don't like tightening their belt either

02:57no they don't like budget cuts no one likes budget cuts but the prime minister has been speaking about

03:02this uh for years decades before long before he became a prime minister he's always said we're

03:09addicted here in france to public expenditure and now he's saying now is the time we it's late

03:16but not too late it's probably our last chance to straighten our financial situation

03:21uh because uh the debt and the deficit are getting out of control we're spending much more

03:28on debt servicing uh than we should because we need to still have a strong welfare state and this

03:36uh cannot stand and so this is why he announced a four-year uh plan to bring down the deficit from

03:435.6 percent of the gdp this year to 2.8 percent in 2029 why 2.8 percent because he says this is the

03:51level where we stop paying uh for the debt more than uh for anything else so he says this is a major

03:59major uh effort and uh so it's a churchillian discord if you want blood sweat and tears but he said you

04:06know we have nothing to lose we're a minority government we might be thrown out very soon but at least we

04:13should tell the french the truth and we should try to address the challenges and not go around them

04:19like has been done in previous decades from the first reactions we're hearing from the opposition

04:25it's going to be a very very complicated task in the national assembly both the left and the national

04:31rally he said those proposals are a non-starter for us and if you remember his predecessor michelle

04:39barnier was kicked out of the prime ministership when when there was a vote on the budget so clearly

04:47uh franco bayrou uh has already proposed what he's going to do there's still weeks to go maybe

04:53to negotiate to be able to build a majority in this very fractious parliament but the odds are

04:59clearly against him is he better at spinning it than his predecessor well we'll see uh he is hoping

05:04that by acting early that is july 15th when parliament will only take up the issue in september october

05:12uh he is maybe having some wiggle room to negotiate for example he's talking about uh eliminating two

05:21national holidays may 8th which is the end of world war ii and uh easter monday he said he already

05:28indicated well this can be negotiated and obviously the opposition is already saying this is unacceptable

05:35those two days are sacred quote unquote we won't accept this so the negotiations are already beginning

05:41in in this uh essence he has some time and uh until now he never had time he has several weeks there's

05:50going to be the summer break to cool everyone down uh maybe he will be able to uh build if not a

05:57majority at least not a majority against him and be able to survive but it's a major major gamble

06:03because he's asking a lot all right uh i can thank you for being with us you you teach at the french

06:09political science institute science book you heard mark perlman there say the word summer break soon

06:14uh playing to stereotypes here the uproar already over uh scrapping two public holidays there are

06:2111 in france there's actually more in germany this 13 um but the stereotype that the french are always

06:29on a break or on vacation is it true or not well i i don't know whether it is true or not uh it's a

06:36stereotype uh i i think though because uh i mean in my uh in my in my life i have the opportunity i've

06:42had the opportunity to work in other countries and i don't feel like uh there is a huge difference in

06:49terms of working hours uh when you compare similar countries similar advanced economies so i think

06:54this stereotype is a bit uh yeah it's an easy way uh to uh to uh to uh to avoid uh tackling real

07:03issues in my view i want to get back in later to what mark was talking about which is you know how do

07:08you how the prime minister sells it to the public this idea of blood sweat and tears uh but uh at the

07:15heart of this 43.8 billion euro uh budget shortfall that has to be uh made up you've been working on a

07:22project uh where you've been looking at inequality yes income inequality and also where the money is

07:30and what we've seen in france the trend is obviously the money goes to the the richer you are the more

07:35money you make but there's also a trend which is the older you are the more money you make yeah it's

07:41true uh this is due to the fact that uh wealth has increased compared to revenue and uh we we we have

07:50this phenomenon that is called the great west transfer that uh we are experiencing in all the

07:57advanced economies in france we estimate that 9 000 billion euros are going to be transferred by the

08:05generation of baby boomers that is a wealthier than the youngest because because we they had time to

08:11build a wealth and this big wealth will be transferred in the next 15 years so that's why we uh we wrote

08:19this report to to address this issue because we think that here there is a source of revenue of

08:25tax revenue uh that uh can be interesting to investigate at least the good news is we're living

08:32longer yes the bad news is we're living longer because the average age at which people inherit i read

08:38somewhere it was like 61 now in france back in the days you were in everything at the moment uh during

08:44which you needed this money to uh to launch your life to buy your first hour it's no longer the case

08:49today in france and on top of that uh inheritance is unequally distributed uh you have 50 people 50

08:57percent of the population that will inherit of less than 70 000 euros and the top one percent of the

09:06population will inherit of more than 30 million euros so here there is a huge issue in terms of inequality

09:13but also in terms of values in terms of what we want for our society do we want uh to to to to

09:21give a value to labor because if inheritance has such a place in the economy then labor has less place so

09:29that's why we make this proposal and so so on this proposal yes how do you do it what is it you a higher

09:37inheritance tax is it taxing uh pensioners how do you do it it's a two-leg reform basically the first

09:44leg is about reforming the base and the rates of the current inheritance tax so that it only impacts

09:51the top one percent of the wealth distribution this is the first leg second leg is about uh taxing

09:59unrealized unrealized unrealized gains uh at death which is actually like unrealized gains are taxed in

10:06all the countries basically uh it's france is uh it's uh an exception uh in regard to that uh to that

10:13issue and we estimate that we can raise 400 billion euros in the next 15 years and 20 billion euros

10:21from 2026 so this is this are huge amounts that at least needs to be uh discussed in the public

10:28debate i don't say it is the panacea this is the only solution this is not our our our argument but we

10:35we feel like we need to uh have um an informed public debate and i'm happy to see that even people

10:41from the center of the political spectrum like the president of the national assembly yael brown pivet

10:47said that she was open to such a measure uh to finance uh the the budget now here's the problem

10:55mark perlman uh one out of every three uh uh french people over the age of 18 are over uh the age of 60

11:04but one out of every two who votes are are over 60 the the older french people have outsized power

11:11do you see these proposals going anywhere with this current legislature i don't see it with the

11:18current government i listen carefully to the prime minister i didn't hear a word about this

11:22uh clearly because there is something that emmanuel macron wants he talked about it last week though

11:28about it yes but the president has said uh one of my legacies is no higher taxes and there's nothing

11:37i will that will happen that will make me go back on this uh promise that i've implemented and so this

11:44is why the prime minister repeated today we don't want higher taxation france already has a record uh

11:51level of taxation there's no reason why he would then when he goes into the details he did say

11:58this was also proposed before that there would be a special uh contribution uh by the super wealthy

12:05this is uh if i translate this is a special tax uh for the ultra wealthy there will be also uh less

12:14tax credits uh for pensioners uh there was a 10 tax rebate they could uh get uh for uh professional

12:22expenses by definition if you're retired you don't have professional expenses but they still got

12:2810 and the prime minister said uh this will be adjusted because we don't feel it's fair and everyone

12:34should participate to this national effort to reduce uh the debt but uh despite those adjustments

12:42which are rather marginal uh there's no way uh there'll be more uh uh tax taxes uh big on inheritance

12:51taxes or other taxes because this is against the mantra of the president he only has two years

12:58remaining and he will not uh abandon this all right so theo iberiken if you're whispering into the

13:05prime minister's ear how do you sell this i would say that um we have big challenges ahead and even the

13:12baby boomers generation is aware of those of those big challenges whether it is a war in ukraine

13:18whether it is climate and it's about the world that they want to leave to their children and

13:23even if you inherit uh i don't know of a house that is worth uh two million euros or something like

13:30that it it it has no value in a world where there is war it isn't it has no value in a world

13:37where uh climate change is destroying everything so this is really about uh uh what the current

13:43generation what they want to leave to their to their children and i'm pretty sure that a lot of

13:48people uh could hear this uh this argument so many thanks for being with us here on france

13:53thank you thanks as well to mark perlman our politics uh editor

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