preview

The Tax Hike Will Not Be Illegal

Better Essays

Cities offer opportunities not found in rural areas such as higher income, security, high-quality facilities and healthcare, and education. For those who seek such opportunities, living in the city would seem very attractive. However, such a lifestyle is inaccessible for many people living in the rural areas surrounding Paris due to the lack of affordable housing in Paris. Therefore, the Parisian government is implementing a 60 percent surcharge on the preexistent residence tax, or taxe d’habitation targeting unoccupied, habitable Parisian homes to allow greater access to the benefits of living in Paris. The tax is intended to financially incentivize owners of unoccupied Parisian homes to lease or sell, alleviating the housing shortage. …show more content…

The residence tax is calculated by halving the notional rental value, or valeur locative cadastrale of the property, which is determined by the local government based on factors such as size, condition, and location. The notional rental value does not consider traditional determinants of property value like supply and demand, which in this case are limited and inflated, respectively. Moreover, the notional rental values have not been updated since the 1970s, adjusted for inflation, or responded to rising demand. Therefore, notional rental values do not accurately reflect rental values under normal market conditions but a property’s speculative yield instead, which is significantly lower than the inflated Parisian housing market rates. AB Kasha estate agent, Alon Kasha, who specializes in high-end properties on the upscale Parisian Left Bank said that the tax hike will have little impact due its relatively small sum, stating that “it’s a non-issue.” Kasha also claims that the updated residence tax will only result in an annual expense of 1,500 euros for properties worth around a million euros—a paucity relative to the value of the homes. An annual residence tax of 1,500 euros would mean that properties priced around a million euros would have a notional rental value of 3,000 euros, only 900 euros above the market rental value of a normal sized, 900

Get Access