French rich bleed over crisis
July 20, 2012
After four days of debate, France's National Assembly on Friday adopted the first budget of Socialist President Francois Hollande, which contains tax hikes to the tune of 7.2 billion euros ($8.8 billion).
The lawmakers supported a so-called solidarity levy for taxpayers with a net worth of more than 1.3 million euros. In addition, the tax measures - targeted primarily at the rich in France - include a tightening of the inheritance tax. Here, the ceiling for tax exemption for children was reduced from 159,000 euros per child to 100,000.
Furthermore, the government has demanded an additional three percent in taxes on cash dividends, as well as doubling the tax rate on financial transactions to 0.2 percent.
The French National Assembly also ended a policy of former conservative president Nicolas Sarkozy, which had exempted overtime hours from social security contributions and taxes. Moreover, Sarkozy's planned hike in the sales tax was cancelled by parliament.
The measures are part of a tax-and-spend program designed by the new Socialist government, aimed at kickstarting France's faltering economy. It is designed to raise 7.2 billion euros in new taxes, while introducing spending cuts to the tune of 1.5 billion euros this year.
The 2012 budget had to be amended for Paris to be able to close a revenue shortfall caused by lower economic growth, as well as to meet France's target of reducing the budget deficit from 5.2 percent to 4.5 percent in 2012.
The French Budget Minister Jerome Cahuzac defended the measures as "a tough effort asked of those who can afford it", while the centre-right Union for a Popular Movement of former president Sarkozy described them as "fiscal clobbering."
uhe/msh (AFP, dpa)