Saturday 21 October 2017

France hits rich with €7.2bn tax hike to plug revenue shortfall

Daniel Flynn

France's new Socialist government announced a raft of tax rises worth €7.2bn yesterday, including heavy one-off levies on wealthy households and big corporations, to plug a revenue shortfall this year from feeble economic growth.

A one-off levy of €2.3bn on those with net wealth of more than €1.3m and €1.1bn in extraordinary taxes on large banks and on energy firms holding oil stocks were central parts of an amended 2012 budget presented to parliament ahead of a vote later this month.

The measures, in line with President Francois Hollande's election campaign pledges, should be approved without hitches given the Socialists' clear majority in parliament.

Mr Hollande, in power since mid-May, said the rich should pay their share as France battles to cut its public deficit from 5.2pc of GDP last year to within 4.5pc this year and 3pc in 2013 -- despite a stagnant economy and rising debt.

The new budget followed a grim assessment of the public finances on Monday by the state auditor, which warned that €6-€10bn of deficit cuts were needed in 2012 and a hefty €33bn in 2013 if France was to achieve its deficit goals and avoid the risk of a spiral in public debt.

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