France approves Francois Hollande's 75% 'millionaire tax'

Constitutional council says super tax on salaries above €1 million is legal

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The Independent Online

France's constitutional council has given President Francois Hollande the green light to introduce a 75 per cent tax rate taking aim at the super rich.

Under the new plan,  which the French council found constitutional, companies will have to pay 50 per cent tax on all salaries exceeding one million euros, or the equivalent of approximately £833, 000.

Including social contributions, the rate will effectively stand at 75 per cent, although the total amount will be capped at 5 per cent of a company's turnover.

The levy is set to affect income earned this year and in 2014.

The 'millionaire tax' could affect more than 450 companies and several football clubs, and could raise more than 200 million euros on an annual basis.

The ruling by the French constitutional council, which has powers to annul laws if considered to violate the country's constitution, puts an end of months of speculation and comes after an earlier draft applying to individuals, rather than households, was turned down last year.

The council found that any tax rate above 66 per cent applied to individuals would be confiscatory.

The super tax, a flagship pledge in Hollande's political manifesto, has infuriated business leaders, high earners and celebrities.

French actor Gerard Depardieu gave up his French passport and fled to Russia in response to the controversial tax, claiming that the French government was punishing high earners for their success.

Depardieu's remarks prompted the anger of the socialist party, including Prime Minister Jean-Marc Ayrault, who described his actions as "pathetic".

President Hollande, who once admitted that he dislikes the rich and has been accused of taking an anti-business stance, has fired back at critics insisting that high earners should do more to boost the country's public finances.

But the super tax has sparked fears of a mass exodus of businesses, bankers and celebrities.

Last year, Prime Minister David Cameron said he would "roll out the red carpet" and "welcome more French businesses to Britain" if Hollande raised taxes on the wealthy.