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Willsher reports: "The standout measure, from a public perspective, was a new 75% tax rate on people earning more than €1m a year. This is expected to hit only 2,000 taxpayers. A new 45% income tax band is to be introduced for those earning more than €150,000 a year."

Francois Hollande has described the 2013 plans as a 'combat budget.' (photo: Andrew Gombert/EPA)
Francois Hollande has described the 2013 plans as a 'combat budget.' (photo: Andrew Gombert/EPA)


France Unveils Super Tax on the Super Rich

By Kim Willsher, Guardian UK

29 September 12

 

Hollande's 2013 budget asks for 'unprecedented effort' to find €36.9bn in savings and includes 75% supertax on the rich

o the dismay of a swath of French bankers, business leaders and the wealthy, President François Hollande has remained true to his word and unveiled €20bn (£16bn) in new taxes, including a 75% "supertax" band that will hit the rich.

In what Hollande has described as France's harshest budget in 30 years, business and personal taxpayers were asked on Friday to make an "unprecedented effort" to slash the country's public spending deficit.

However, the Socialist government sidestepped swingeing cuts in public spending, including pensions and state salaries, in its 2013 budget, which aims to find €36.9bn in savings.

It was also forced to concede it could not keep its pledge to get the country out of the red by 2017.

The budget was a delicate balancing act in which Hollande sought to reassure investors and the financial markets, while simultaneously hiking taxes on large businesses and high-earners.

However, it commits the government to an austerity programme that will be unpopular with leftwingers in the party, at a time when unemployment is rising and the economy teeters on the brink of recession.

Hollande and the prime minister, Jean-Marc Ayrault, had stressed prior to what they described as a "combat" budget their aim to reduce France's public deficit to 3% of GDP by 2013, in line with its EU commitments. The deficit is around 4.5% of GDP for this year.

The budget aims to raise two-thirds of the £36.9bn savings with extra taxes split evenly between households and large companies, plus more than €10bn in public spending cuts. The burden between taxes and spending cuts would be shared 50-50 from 2014, the government said.

The standout measure, from a public perspective, was a new 75% tax rate on people earning more than €1m a year. This is expected to hit only 2,000 taxpayers. A new 45% income tax band is to be introduced for those earning more than €150,000 a year.

Business leaders, including L'Oréal chief, Jean-Paul Agon, have criticised the "supertax", claiming it would prevent France from attracting the cream of executives and drive the wealthy into tax exile.

On Friday, France's opposition UMP party reacted to the budget with dismay.

Former agriculture minister Bruno Le Maire said he was worried and disappointed, adding: "France is going to the wall."

He told Europe 1 radio: "None of the solutions announced will get the country back on its feet, fight unemployment or create jobs."

Marine Le Pen, president of the far-right Front National, described the budget as "absurd hyper-austerity".

She said: "This budget puts France on the same road as Greece, Ireland, Portugal and Spain."

François Rebsamen, president of the Socialist party group in the senate - the upper house of parliament - said the budget was "constructive". He said: "The battle to put our country back on its feet, for employment, for the return of growth and spending power, has started and the 2013 budget, which is fair, rigorous and constructive, will be a decisive factor in winning it.

"Efforts have been asked of the wealthiest while the middle and working classes are spared. The tax burden on companies has been rebalanced in favour of small and medium enterprises, and therefore in favour of competitiveness."

Ayrault promised on television on Thursday that the budget deficit target of 3% - a pillar of Hollande's presidential campaign earlier this year - would be met. He insisted France had to avoid the escalating borrowing costs that have torpedoed the economies of other eurozone countries.

"If we abandon this goal, then straight away the rates will rise and we will find ourselves in the same situation as Italy and Spain. I do not want that," he said. "We cannot continue with the debt and the deficits we have now."

The government fears any sign it is not addressing its inflated deficit might see the financial markets turn on France, the eurozone's second biggest economy.

However, Ayrault admitted France would not balance its books by 2017, when Hollande's term in office ends, but would have a public deficit of around 0.3% of GDP.

He also confirmed he was expecting growth of 0.8% for 2013, which economists say is too optimistic. He said the figure was "realistic" and "attainable". The government is then expecting 2% growth every year between 2014 and 2017.

Just four months into his five-year term, Hollande is under fire from all sides. As well as the grumbling from business leaders, unemployment that topped the symbolic 3 million in August, and tumbling popularity in the polls, the president is facing revolt from traditional allies in the unions and leftwing groups that are threatening strikes if the budget is too austere.

A demonstration is planned for Sunday against the EU budget treaty, which imposes strict deficit limits.

The French finance minister, Pierre Moscovici, said getting the public deficit down to 3% was "vital for the credibility of the country".

"We are committed to it and we will meet it," he said.

However, Eric Heyer of the Economic Conjuncture Observatory, was sceptical: "It has never been done before," he told French journalists.

Elie Cohen, director of research at the CNRS thinktank, added: "A 1.5% reduction of the deficit represents a considerable effort at the best of times. In a period of zero growth it would be exceptional."

Ayrault has claimed that only 10% of French taxpayers will pay more as a result of the 2013 budget, but analysts estimate the new taxes mean 4.1m households will pay more, and 8.5m will pay less.

The prime minister added that the increased taxes on businesses would not hit small and medium-sized companies crucial for job creation.

"The effort we are demanding from our biggest companies is reasonable and fair. Not only have we spared small companies, we are going to help them create the jobs the country needs," he said.

 

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+23 # indian weaver 2012-09-29 06:38
Obama, Congress, are we listening over there in Washington, DC? I pray that the French tax increases may be enacted here too. And in a similar format, forcing at last the 1% pay a little for the benefits they receive from our government enabling their wealth, insteading of taking handouts from Obama and Congress, happening under the present tax system. Is our government capable or intelligent enough to understand that this is a big clue, a marching order for a recovery from the horrible economic mess our cowardly government and the vicious 1% has created here? Obama, Congress, do you listen ever to anyone anymore? Do you listen to us The People who elect you and pay your salaries, enormous health and retirement benefits? I don't think so. And, do any of The People know what is happening in France? Not if they listen only to the corporate news. And will any of our corporate censored illegitimate news sources report on the French tax hikes for economic recovery? We could only hope, but unlikely unfortunately. Our corporate news encourages world wars because they, as part of the MIC owned by the MIC, earn so much money supporting wars and war crimes. And war, tragedy, assassinations and torture sell viewership, hiking their ratings. That is what counts to them, certainly not honestly reporting important news. What happened to LBJ's war on poverty? I'll bet that is the war 99% of us can and will support.
 
 
-2 # Alexis Fecteau 2012-09-29 16:36
Get real, Obama is and always will be a 1%-er, owned and operated by the 1%.

He is already committed to the 1% to attack Medicare and Social Security in his next term, just you watch.
 
 
+11 # AMLLLLL 2012-09-29 07:49
If every eligible voter voted in the US, we might actually clean out the clingers to the status quo, and legislate toward the people, curb the stranglehold of the corporations and the 1%, and revamp the tax code to something more progressive and transparent.

But alas, even in a hot election cycle as this, the most we can hope for is 60%.
 
 
+8 # Antemedius 2012-09-29 08:25
This could turn out to be a disaster if this idea spreads to the United States.

Has anyone actually thought this through?

Who would be left with enough money to contribute all the hundreds of millions needed to support corrupt politicians like Obama and Romney and any others who might be moved to be "the only thing between [wall street] and the pitchforks".

The whole two party system could implode and all we'd be left with would be freakin' idealists like Jill Stein or Rocky Anderson to run things.

And then where would we be?
 
 
+6 # indian weaver 2012-09-29 09:15
Exactly. Then we would be back on the road to fairness, employment, prosecution of banker and government war criminals, and a real democracy would again be likely (remember, the UN Commission on Human Rights has just issued a report critical of our 2-party / electoral college system as undemocratic). Rocky Anderson (the Justice Party - study his background, experience and platform if you haven't done so already) is one of the really good candidates for president, like Jill Stein. Neither Obama nor Romney are acceptable. Neither is a leader. If we had a democratic government with multiple parties like the parliamentary system, then the government would be significantly more widely inclusive and accountable to us The People (the 99%) who employ and pay government employees.
 
 
+2 # Antemedius 2012-09-29 12:46
Sounds like work, but I guess we'd just have to grin and bear it...
 
 
+1 # seenitall 2012-09-30 05:57
I just had this image of having to decide who would be the best of two great candidates instead of the least of two evils.
 
 
+1 # Antemedius 2012-09-30 07:56
You're a dreamer.

And I bet you're not the only one...
 
 
+10 # reiverpacific 2012-09-29 09:29
This is one of the reasons why I plan to get back to Europe and France in particular within the next few years. Even the UK, a weak and weakening Cameron nothwithstandin g, makes these greedy. leeching bastards and their whores pay their whack.
Also, what the owner media here doesn't tell you is that the bubble in property prices never happened in France; they have been stable for many years even under Sarkozy, so people never had their house values go upside-down from false promises and big bank tricksters. I have a couple of close friends from Scotland who bought a typical village house and long back garden in the Haute-Marne (Champagne region) a few years ago for €25K in need of fixing of course, have now retired there -and love it. Also, national health care benefits are freely and instantly transferable between European Union nations in spite of Sarkozy's attempts to scupper that, which alone is worth keeping the Union intact. Angela Merkel must desist or go -she's trying to play the austerity game both ways and see what emerges but it's a fool's game and I'll bet the WTO is somewhere behind it.
 
 
+1 # WolfTotem 2012-09-29 13:54
Quoting reiverpacific:

Also, what the owner media here doesn't tell you is that the bubble in property prices never happened in France


NOT TRUE! The bubble inflated much later and not as much as in some European countries, like the UK or Spain. But it sure did inflate - of course, less in some rural areas than elsewhere in the country. After going down, stable now in most places except Paris and the southeast, where demand remains high.

On a deeper level, oligarchy's more present in Europe than a decade ago, although less entrenched than in the US. But Social Democrats like Hollande are still fighting with one hand tied behind their backs in today's world and very much at risk from populists and neo-Fascists at the next elections in 2017.
 
 
+1 # reiverpacific 2012-09-30 08:56
Quoting WolfTotem:
Quoting reiverpacific:

Also, what the owner media here doesn't tell you is that the bubble in property prices never happened in France


NOT TRUE! The bubble inflated much later and not as much as in some European countries, like the UK or Spain. But it sure did inflate - of course, less in some rural areas than elsewhere in the country. After going down, stable now in most places except Paris and the southeast, where demand remains high.

On a deeper level, oligarchy's more present in Europe than a decade ago, although less entrenched than in the US. But Social Democrats like Hollande are still fighting with one hand tied behind their backs in today's world and very much at risk from populists and neo-Fascists at the next elections in 2017.

Well now I'm not getting into a prolonged dialogue about French property prices with anybody -but I've been monitoring this carefully for a few years to see what I could afford when I decide to move, I get e-brochures (by request) constantly from French real-estate agents in different regions and nationally, and have noticed no appreciable increase in seven years, so I'm afraid you're wrong there.
There's a slight increase in the upper-end "Glam'" properties but I've no interest in such anyway, even if I could afford them, as I want to live in a real community.
Spain on the other hand was hugely inflated and is now a buyer's market but stagnant.
 
 
0 # WolfTotem 2012-09-30 13:54
Agreed - shouldn't make this digression too long, but I was going back further than 7 years. The graph on page 24 of http://www.insee.fr/fr/indicateurs/analys_conj/archives/juin2011_d1.pdf gives a general picture, but there were great bargains in many areas until about 2002, sometimes much later. Not so many now, though prices have, as you say, not risen since 2005. I still worry about the medium-term political outlook in France...
 
 
0 # reiverpacific 2012-09-30 15:43
Quoting WolfTotem:
Agreed - shouldn't make this digression too long, but I was going back further than 7 years. The graph on page 24 of http://www.insee.fr/fr/indicateurs/analys_conj/archives/juin2011_d1.pdf gives a general picture, but there were great bargains in many areas until about 2002, sometimes much later. Not so many now, though prices have, as you say, not risen since 2005. I still worry about the medium-term political outlook in France...

Well, let's be grateful for the current return to sanity. France, like my homeland Scotland, is at base a Socialist country with strong roots, significant Union Power and informed voters who can still bring their respective countries to a screeching halt if they get pissed off enough.
 
 
+10 # WolfTotem 2012-09-29 09:38
"It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion"
Adam Smith: An Inquiry into the Nature and Causes of the Wealth of Nations, Book 5, CH.II.

"When you are piling up earth to make a wall, if you take from the top to build up the base, then both top and bottom will be secure. Is this not gain? If you take from the bottom to increase the height of the top, there is the danger it will fall. Is this not loss?"

"When those below are rich, those above are secure. Therefore benefiting those below is called increase."

Cheng Yi – China, 11th century A.D.

From The Tao of Organization, Cheng Yi, transl. Thomas Cleary, publ. Shambhala, 1988, pp. 131-132 and 136.

"The palace is not safe when the cottage is not happy." Benjamin Disraeli

No need even to cite Marx...
 
 
0 # 666 2012-09-30 15:50
@wolftotem
but that's the point, they (capitalist-fas cists) want the whole thing to collapse (norquist has been saying this for decades). once it collapse, they can rebuild frankenstein according to their own twisted ideals.

open your eyes people, the real terrorists are inside the beltway! and they collecting govt paychecks.

bravo france; but let's go back to the 90% tax rate on the elites here -- and make sure the rich and corps have no deductions or loopholes. We're tired of that golden shower they call trickle-down.
 
 
+6 # billeeboy 2012-09-29 13:00
Bravo! Vive la France! If only M. Hollande's colleagues could channel the Republicans here. Not likely since to the Repugs "European" is a dirty word!
 
 
-12 # phantomww 2012-09-29 14:03
I guess I am the only one to notice that the new super rich tax will only hit 2000 filers. So in a country of 65 million there are only 2000 who make over 1 million euros. Does that not seem low to you? It sure is low to me. Wonder why there are so few? Wonder if that number will increase or decrease now with the new 75% rate? Wild guess, I'm going with decrease. So if the number decreases then where will the money come from?

Keep spending France. I am sure you will be able to tax your way to fiscal health. Any good progressive will tell you that.
 
 
0 # Granny Weatherwax 2012-10-02 17:31
65 millions?
Last time I checked it was more 74...
 
 
0 # Valleyboy 2012-10-01 05:09
Viva le France!

Interesting that the guardian, a so called left wing paper, has f-all good to say about it.
 
 
0 # Granny Weatherwax 2012-10-02 17:32
If I may you got your vowels wrong: it is Vive la France!
 
 
0 # dkonstruction 2012-10-01 06:07
While one can (and should) tax the rich and super-rich accordingly, this does not mean that the French Socialists have abandoned the austerity paradigm (as can be seen by the recent demonstrations in France) so people should not confuse the socialist call to tax the rich with a substantive change in economic policies...the european "socialist" (who are socialist in name only as far as i am concerned) have bought into the very same neo-liberal austerity paradigm and the conservatives (like here in the US where for the most part both the repubs and the dems buy into it...the only real difference between them is when to start the austerity here).
 

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