France approves 75% tax on rich to tackle government deficit
French President François Hollande is imposing a 75% tax on incomes over €1million (£800,000).
The changes were announced on the 28th September under the Socialist Party’s first budget – other pledges for 2013 include a rise in taxes on capital in line with income tax rates. The actions are meant to recoup €30bn (£23.9bn) of public debt.
It is hoped these measures, part of France’s strictest austerity budget in 30 years, would rebalance taxes in favour of small- and medium-sized businesses.
The tax hike would not be permanent but only last several years to raise money to try and bring down the government deficit to below 3%.
Critics have opposed the changes, saying they will hurt the country’s most talented entrepreneurs and encourage top earners to leave France. Jean-Paul Agon, CEO of L’Oreal, a high earner who is to be hit by the new tax voiced his opinion to the Financial Times: “If there is such a new tax rule, it’s going to be very, very difficult to attract talent to work in France, almost impossible – at a certain level, of course.”
Unemployment is at a ten-year high in France and François Hollande’s approval ratings are rapidly falling as many French people believe he has acted too slowly in dealing with the economic crisis.