French to pursue wealthy despite 75% tax rejection
France’s socialist government has vowed to continue squeezing the rich, despite the rejection of its controversial 75 per cent tax rate by the country’s constitutional council.
President François Hollande was forced to axe his 2013 budget proposal to impose the high marginal rate on incomes above €1 million when the council struck it down on Saturday.
But Pierre Moscovici, finance minister, said the 75 per cent rate was an important element in what he called the government’s policy of social justice. He insisted the council ruling was a technical, not fundamental, objection and promised to introduce a revamped proposal in the new year.
“Our objective is to maintain an exceptional, temporary tax for the most rich,” he said. He “respected” criticism of the government’s tax policy, including from abroad, but it had been exaggerated, he said.
‘Period of crisis’
“France remains an attractive country for investment. We have no intention to make France inhospitable, but we are in a period of crisis.”
He added: “It is logical that the wealthiest should make a contribution at this time.”
The constitutional council’s ruling is an embarrassing political blow to Mr Hollande, who announced the top tax rate, due to take effect from January 1st for two years, during his successful election campaign early this year against former president Nicolas Sarkozy, to acclaim on the left and general popular support.
But, along with other sharp increases in capital gains and wealth taxes, the 75 per cent rate has prompted furious criticism from business leaders and an apparent jump in those opting for tax exile, including film star Gérard Depardieu, entrepreneurs and senior private equity executives.
Depardieu in exile
Mr Depardieu was reported yesterday as saying the constitutional ruling would not affect his plans to move to Belgium. “This changes nothing,” he told Le Parisien.
The centre-right opposition UMP party, which brought the case against the tax to the constitutional council, demanded that Mr Hollande abandon the proposal altogether.
Jean-François Copé, newly elected party president, said: “François Hollande has deceived the French into believing that it is enough to tax the rich to solve their problems.”
The council did not rule directly against the 75 per cent rate, but objected to how it was to be imposed. It said plans for the tax to apply to individuals, not households broke the principle of equality. The rate was set to affect only about 1,500 individuals, but it has become a symbol of Mr Hollande’s determination to make the wealthy bear the brunt of France’s effort to bring its debt-burdened public finances back into balance. – (Copyright The Financial Times Limited 2012)