François Bayrou, the French prime minister, has provoked anger in Italy after suggesting that its economic success is linked to attracting wealthy investors through favourable tax regimes. His remarks came during a prime-time television interview in which he warned that new wealth taxes in France would only encourage “tax nomadism” and drive high-net-worth individuals abroad.
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The 74-year-old prime minister, who faces an almost certain defeat in a confidence vote next week, accused Italy of engaging in “fiscal dumping”. The comment sparked a swift rebuke from Giorgia Meloni’s government, which dismissed the claim as “completely baseless” and insisted that Italy’s economic performance is rooted in “stability and credibility”. Officials pointed out that the Italian government had in fact doubled its levy on wealthy residents last year.
Fiscal dumping refers to the practice of lowering taxes to attract foreign investors, something the European Union warns against for fear of distorting competition. Italy has offered incentives for wealthy foreigners since 2016, including a flat tax on global assets and inheritances, drawing criticism but also significant interest from expatriates. The French government, however, is grappling with a soaring deficit of 5.8 per cent of GDP, nearly double the EU’s permitted threshold, and Bayrou has argued that austerity measures are necessary to restore fiscal discipline.
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The controversy over Bayrou’s remarks comes at a moment of intense political pressure for the centrist leader, whose minority government is struggling to push through a budget worth €44 billion in deficit reductions. Opposition parties across the spectrum – from the far-right National Rally to France Unbowed and the Greens – have ruled out supporting him, leaving his survival in serious doubt. Failure to secure approval could force France into the unprecedented step of seeking IMF assistance, a scenario Bayrou himself has warned against.
