News / Europe

French Leader's Super-Tax Falls Flat, Angers Businesses

France President Francois Hollande during a televised interview on a French TV channel, March 28, 2013, in Paris.
France President Francois Hollande during a televised interview on a French TV channel, March 28, 2013, in Paris.
Reuters
France's Socialist president may save face with some supporters by resurrecting a 75 percent super-tax on million euro salaries, but his plan to shift the levy from individuals to companies only alienated business leaders on Friday and impressed few even on the left.

Francois Hollande announced a re-draft late on Thursday of his plan for a 75 percent tax on income over 1 million euros - an election pledge that was crushed by the Constitutional Council - so that it hits companies rather than individuals.

The rehash means he can maintain an emblematic tax rate meant to symbolize making the rich help pull France out of crisis, rather than having to cap it at the 66 percent France's top court says would be the legal maximum for individuals. Yet it will reinforce a view that Hollande is anti-business, and could reap even less for the cash-strapped government than the initial version, which would have raised some 200 million euros or $260 million a year from around 1,500 millionaires.

"I don't understand the president's thinking," said Laurence Parisot, head of the Medef employers' group, calling the rejigged super-tax a "knock to the business sector."
        
French economist Thomas Piketty, a taxation expert, called the proposed move "a patch-up job."

"It's as useless as the original plan. It's symbolic and inefficient and it avoids the bigger issue which is the need for a broad fiscal reform,'' he told Reuters.

Analysts struggled to guess how many high-earners could be hit, but many of those on million-euro packages receive much of it in benefits like stock options that would likely be exempt.

BNP Paribas economist Dominique Barbet said the revived super tax would have a negligible effect on the battle to reduce the groaning public deficit. "It's marginal," he said.

The tax was only ever meant to be in place for a couple of years, so companies may now dodge it by holding back bonuses for a few years or paying employees through offices outside France.

"It's a symbolic tax he wanted to hold onto at all cost, but this is ridiculous and absurd. It's very disappointing," said Michel Rousseau, head of liberal think tank Fondation Concorde. "He will raise absolutely nothing, people will cheat like crazy. The French have a capacity to adapt to bad news."

Scratched record

Hollande, scrabbling to shore up state coffers and kick-start investment and spending as his growth, deficit and job creation goals fall apart, made the tax announcement in a primetime TV interview aimed at restoring public faith in him.

Critics of his performance said his assertion that all the tools were in place for a recovery made him sound flippant.

Even the left-wing Liberation daily weighed in. "He kept repeating 'all the tools are on the table' as if all we need to do is wait for 2015 for the country to recover," it wrote in an editorial.

The hard-left Left Party's national secretary Francois Delapierre said Hollande sounded like "a scratched record."

Hollande unveiled his initial 75 percent tax during his campaign for the May 2012 election to show people fed up with economic gloom that the rich would hurt too.

Business leaders see it as unfair the tax will be shunted onto them while sports stars and celebrities on huge incomes will likely escape it. A promise by Hollande to lighten taxes on the sale of small businesses was not enough to soothe them.

"He said during his campaign he wanted a specific tax for the wealthiest French. Now we have something completely different with companies being taxed. What about the richest French who do not work in companies, like entertainers?" asked Medef's Parisot.

The government gave no details beyond Hollande's statement that shareholder meetings at big companies would be asked to look at earnings. "When they exceed one million euros, the company will have a contribution to pay which, all taxation added together, will come to 75 percent,'' he said.

Frederic Oudea, head of France's No. 2 listed bank Société Générale, told Europe 1 radio the government was wasting time and should be focused on improving competitiveness.

"Everyone should make an effort, but a rate of 75 percent is too high, whether paid by companies or employees,'' he added.

Piketty has long pushed for a broad reform to streamline the various payroll contributions into a more transparent system and make income tax payable at source, like in most countries.

The French have welfare contributions cut from their wages and then pay income tax after annual declarations. Exemptions, for example if a couple has children, mean only one person in two pays any income tax.

"We are the only country not to have switched to taxation at source. This is a bit like taxing at source except it will apply to 300 people whereas we should be doing it for all 65 million French,'' Piketty said.

You May Like

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs