France raises taxes for top earners
Friday 28 September 2012
The French government is to introduce a 75% income tax rate for top earners as part of what it called a “fighting budget” to boost jobs and help growth.
But critics said it lacked fundamental reforms that could jumpstart economic growth.
President Francois Hollande's cabinet defended the spending plan for next year, saying it would win the "battle" against joblessness.
Like many European countries, France must tread a fine line between cutting the debts that dragged them into the financial crisis and investing in the economy to spur growth.
The French economy, the second largest among the 17 countries that use the euro, has not grown for three straight quarters, the national statistics agency confirmed today. Unemployment has been on the rise for more than a year and stands at 10.2%.
Economists warn, however, that things could get much worse in France if it does not get serious about slashing state spending and reforming stringent labour laws.
"This is a serious budget, it's a leftist budget and it's fighting budget," Finance Minister Pierre Moscovici told French radio.
Because Mr Hollande promised that he would slash the country's deficit to 3% next year - a limit required by European rules - the government must find 30 billion euro (£24bn) in savings. One-third will come in spending cuts, with the rest in new or higher taxes on the wealthy and big companies, including a 75% tax on incomes over one million euro (800,000).
Among the other measures included are: a new income tax level at 45% for those making more than 150,000 euro (£120,000), an increase of capital gains taxes to bring them more in line with how salaries are taxed, and a cap on certain deductions for large companies on their income taxes.
The 75% tax will last for two years and has always been billed as a symbolic measure since it will bring in very little revenue.
Several businessmen and politicians in the opposition have said that's exactly what's wrong with the 2013 budget: It sends the message that France doesn't like the rich and isn't open for business.
"France is sick from a model that isn't viable," said Guillaume Carou, CEO of Didaxis and president of the Club of Entrepreneurs, which represents 15,000 small businesses. "But (the government has) chosen to keep it, that's what the 2013 budget reveals."
Prime Minister Jean-Marc Ayrault rejected that characterisation, however, insisting that the budget would win the battle against unemployment.
"It's a budget that aims to inspire confidence and to break the debt spiral that keeps growing and growing," he said after the budget was presented to the Cabinet.
The budget is built around an expectation of 0.8% growth for next year. If growth misses the projections, more cuts could be needed later.
Mr Moscovici conceded that most economists predict the French economy will grow just 0.5%, but said that if the European debt crisis stabilises, France would meet its targets.
Ian McKellen and Patrick Stewart bromance continues: X-Men star gushes about 'pussy cat' BFF Patrick Stewart
David Cameron stung by jellyfish: PM hurt after ignoring advice of locals while on holiday
South Korea ferry: Vice principal rescued from sinking ship found hanged
Hollande's affair: Catherine Deneuve and Sophie Marceau in war of words over President's relationship with Julie Gayet
Kim Jong-un, crowds and contraband kit: Inside North Korea with the the Pyongyang marathon winner
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Refugee facing deportation from Sweden saved by fellow passengers refusing to let plane leave
- 1 KFC 'sorry' after lesbian couple are kicked out of Bath restaurant for 'heavy petting'
- 2 Dylan Tombides: West Ham confirm 20-year-old striker has died after battle with cancer
- 3 24 people applied for the 'world's toughest job', here are their interviews
- 4 'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
- 5 PFA Player of the Year: Luis Suarez, Daniel Sturridge and Steven Gerrard all nominated as Liverpool dominate award shortlist
£150.00 per week: QA Apprenticeships: This company is a company that specializ...
£153.75 per week: QA Apprenticeships: This company is an innovative outsourcin...
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£150.00 per week: QA Apprenticeships: We've been supplying best of breed peopl...