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French Socialists struggle with millionaire tax

Text by Joseph BAMAT

Latest update : 2013-01-08

Disagreements have emerged between members of France’s Socialist-led government over a bill to tax the country’s highest earners, after the original 75% law championed by François Hollande was struck down by France’s highest court.

France’s ruling Socialist government was struggling to rebound a week after the Constitutional Council struck down its law to tax the country’s highest earners at a 75% rate, with government ministers publicly disagreeing on how to rescue one of President François Hollande’s flagship measures.

On Sunday, Finance Minister Pierre Moscovici told France Inter radio that the bill was being re-written and that it would be an “exceptional, temporary” law that should not outlive France’s current economic slump.

Moscovici’s words appeared to contradict comments made earlier in the day by Budget Minister Jérôme Cahuzac, who spoke of a “permanent” tax that would be on the books no later than the autumn of 2013.

In late December, France’s top court ruled against a law that would have taxed individual revenues above 1 million euros per year at 75%, claiming that the move was “excessive” and would unfairly target certain households because it singled out individuals instead of couples who file taxes jointly.

Following the decision, Hollande said a new bill would be rewritten “in the same spirit” as the law scrapped by the top court.

“Clearly it was a slap in the face for Hollande, who was personally attached to the measure,” said Céline Bracq, deputy director of BVA Opinion, a French polling agency. “We learned after the May elections that the 75% tax was Hollande’s own idea, not one of his advisors’ proposals. This was his big symbolic measure.”

In a telephone interview with France 24, Bracq said it was critical for the French president to bounce back with a new, compatible tax measure in order to remain credible among voters and appease his supporters on the left. “Hollande must now maintain that symbol one way or another. This is a very fragile issue for him.”

On Monday, Labour minister Michel Sapin urged expediency in drafting a new bill, playing down the apparent differences of opinion within the government.

“Our goal is to ensure that those who earn a lot of money contribute a little more to the country’s economic recovery,” Sapin told Canal+ television.

Public remains in favour

The Socialist government’s struggle to regroup after the fateful decision by the Constitutional Council, comes as French film star Gérard Depardieu continues to grab headlines for his decision to seek tax exile in Belgium and disavow his French passport.

Over the weekend the portly movie actor met Russian President Vladimir Putin in the Black Sea resort town of Sochi, where he was handed Russian citizenship.

But despite the outcry over the 75% tax from some of France’s top earners, including the country’s professional football league, most French people remain in favour of a new, higher tax for the wealthiest citizens.

A December 4 opinion poll by BVA showed that more than 60% of respondents said they were in favour of a higher tax rate for those who made the most money, although most people also thought 75% was too high.

“Only a minority of those who favour the new tax on the super rich say 75% or higher is appropriate. Most favour a tax rate somewhere between 50% and 75%,” Bracq noted.

In an opinion piece, the leading French daily Le Monde, has sharply criticised Hollande for the original measure, saying it had infuriated business leaders and promised to bring in only meagre revenues for the state. The newspaper even predicted it could haunt him during the rest of his mandate.

Bruno Le Roux, head of the Socialist Party at the National Assembly, said over the weekend he was ready to abandon the 75% figure, adding that his party members should show more flexibility on the tax rate.

Date created : 2013-01-07


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