Tax Analysts Blog

French Budget Minister Caught In Tax Probe

Posted on Jan 29, 2013

Like other nations, France is cracking down on offshore tax evasion. The policy makes a lot of sense. Rather than raise taxes on people or introduce new taxes, would it not be preferable to collect all the taxes that are already due and owing under current law? One bump along the road is that you can never be sure who is revealed to be a tax dodger.

Earlier this month the French Budget Minister, Jerome Cahuzac, was placed under investigation for allegedly using a secret offshore bank account to evade taxes. If that strikes you as odd, you're not alone. As budget minister, Cahuzac's job is to fund the Republic and reduce the nation's deficit. And that means making sure all French taxpayers pay their fair share.

The bank account in question was with the UBS branch in Geneva, Switzerland. It had been in place since the 1990s, at which time Cahuzac was a practicing plastic surgeon who specialized in hair transplants. I wasn't aware that plastic surgeons go on to become budget ministers, but then the French are kind of different.

Cahuzac allegedly closed the account in 2010, fearing detection by authorities, and transferred the funds to a separate offshore account in Singapore. A French media source claims to have an audio recording of Cahuzac and his bankers discussing the UBS account and the need to transfer the funds to Singapore.

For his part, Cahuzac denies any wrong doing and insists that he never had a Swiss bank account. He claims the audio recordings are a politically motivated hoax, and that he dutifully pays all his French taxes.

Prosecutors are forging ahead with their inquest, which is being conducted by the fiscal division of the Interior Ministry. Time will tell whether Cahuzac is innocent of the charges. In the meantime the affair has caused nothing but embarrassment for French President Francois Hollande.

Needless to say, this is not the type of attention the government wanted as they attempt to raise the top marginal tax rate to 75% on individuals earning more than €1 million per year (roughly $815,000/year).

Read Comments (1)

von gneisenauFeb 2, 2013

"more than €1 million per year (roughly $815,000/year)."

Actually, roughly, $1.36m per year. (I know, math is hard).

I don't see what the fuss is all about - socialists may be evil but they're not
stupid.

At least he is not pursuing his original surgery career - wouldn't want that
guy operating on me.

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