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

    UN Observes International Day of Peacekeepers

    The U.N. honors 3,400 peacekeepers killed since first mission in 1948

    Video Rolling Thunder Tribute to US Military Turns into a Trump Rally

    Half-million motorcycles are expected to rumble Sunday afternoon from Pentagon to Vietnam War Memorial for rally in event group calls Ride for Freedom

    The Struggle With Painkillers: Treating Pain Without Feeding Addiction

    'Wonder drug' pain medications have turned out to be major problem: not only do they run high risk of addicting the user, but they can actually make patients' chronic pain worse, US CDC says

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Chinese-Americans Heart Trump, Bucking National Trendi
    X
    May 27, 2016 5:57 AM
    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Chinese-Americans Heart Trump, Bucking National Trend

    A new study conducted by three Asian-American organizations shows there are three times as many Democrats as there are Republicans among Asian-American voters, and they favor Hillary Clinton over Donald Trump. But one group, called Chinese-Americans For Trump, is going against the tide and strongly supports the business tycoon. VOA’s Elizabeth Lee caught up with them at a Trump rally and reports from Anaheim, California.
    Video

    Video Reactions to Trump's Success Polarized Abroad

    What seemed impossible less than a year ago is now almost a certainty. New York real estate mogul Donald Trump has won the number of delegates needed to secure the Republican presidential nomination. The prospect has sparked as much controversy abroad as it has in the United States. Zlatica Hoke has more.
    Video

    Video Drawings by Children in Hiroshima Show Hope and Peace

    On Friday, President Barack Obama will visit Hiroshima, Japan, the first American president to do so while in office. In August 1945, the United States dropped an atomic bomb on the city to force Japan's surrender in World War II. Although their city lay in ruins, some Hiroshima schoolchildren drew pictures of hope and peace. The former students and their drawings are now part of a documentary called “Pictures from a Hiroshima Schoolyard.” VOA's Deborah Block has the story.
    Video

    Video Vietnamese Rapper Performs for Obama

    A prominent young Vietnamese artist told President Obama said she faced roadblocks as a woman rapper, and asked the president about government support for the arts. He asked her to rap, and he even offered to provide a base beat for her. Watch what happened.
    Video

    Video Roots Run Deep for Tunisia's Dwindling Jewish Community

    This week, hundreds of Jewish pilgrims are defying terrorist threats to celebrate an ancient religious festival on the Tunisian island of Djerba. The festivities cast a spotlight on North Africa's once-vibrant Jewish population that has all but died out in recent decades. Despite rising threats of militant Islam and the country's battered economy, one of the Arab world's last Jewish communities is staying put and nurturing a new generation. VOA’s Lisa Bryant reports.
    Video

    Video Meet Your New Co-Worker: The Robot

    Increasing numbers of robots are joining the workforce, as companies scale back and more processes become automated. The latest robots are flexible and collaborative, built to work alongside humans as opposed to replacing them. VOA’s Tina Trinh looks at the next generation of automated employees helping out their human colleagues.
    Video

    Video Wheelchair Technology in Tune With Times

    Technologies for the disabled, including wheelchair technology, are advancing just as quickly as everything else in the digital age. Two new advances in wheelchairs offer improved control and a more comfortable fit. VOA's George Putic reports.
    Video

    Video Baby Boxes Offer Safe Haven for Unwanted Children

    No one knows exactly how many babies are abandoned worldwide each year. The statistic is a difficult one to determine because it is illegal in most places. Therefore unwanted babies are often hidden and left to die. But as Erika Celeste reports from Woodburn, Indiana, a new program hopes to make surrendering infants safer for everyone.
    Video

    Video California Celebration Showcases Local Wines, Balloons

    Communities in the U.S. often hold festivals to show what makes them special. In California, for example, farmers near Fresno celebrate their figs and those around Gilmore showcase their garlic. Mike O'Sullivan reports that the wine-producing region of Temecula offers local vintages in an annual festival where rides on hot-air balloons add to the excitement.
    Video

    Video US Elementary School Offers Living Science Lessons

    Zero is not a good score on a test at school. But Discovery Elementary is proud of its “net zero” rating. Net zero describes a building in which the amount of energy provided by on-site renewable sources equals the amount of energy the building uses. As Faiza Elmasry tells us, the innovative features in the building turn the school into a teaching tool, where kids can't help but learn about science and sustainability. Faith Lapidus narrates.

    Special Report

    Adrift The Invisible African Diaspora