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French Constitutional Council rules out high tax on rich, gov't vows new approach

English.news.cn   2012-12-30 01:01:18            

 • French Constitutional Council rejected 75% income tax rate on earnings over 1 mln euros per year.
 • The government, in response, proposed to figure out new measures.
 • President Francois Hollande heard the news "calmly."

PARIS, Dec. 29 (Xinhua) -- French Constitutional Council rejected the 75-percent income tax rate on earnings over 1 million euros (1.32 million U.S. dollars) per year, while the government, in response, proposed to figure out new measures, the prime minister's office said Saturday.

In an effort to make the rich contributing more to help the debt-laden country out of the economic crisis, the French Socialist government put up the measure to impose as high as 75 percent of income tax rate on the top earners after President Francois Hollande came to power in May.

The policy has been under attack after being recently approved by the government and has caused some wealthy citizens, including famous French actor Gerard Depardieu seeking tax exile in Belgium.

The Constitutional Council had laid down Saturday morning this high tax proposal, saying it is against the equality in public charges.

Prime Minister Jean-Marc Ayrault reacted immediately by promising to "take actions", vowing that "new measures will be presented in the framework of the next Finance Act," according to a statement from the prime minister's office.

"The prime minister takes note of the decisions of the Constitutional Council that validates the key provisions of the Finance Act 2013 and the supplementary budget for 2012," it added, noting that the legislators dismissed budget draft's insincerity, a move that may silent growing critics of the parliamentary opposition.

Citing a close source to the Elysee, the news channel BFMTV said President Francois Hollande, in tough battle to regain disgruntled voters' confidence, heard the news "calmly."

"It (the rejected law) was one of the hypothesis and he (Hollande) would have several discussions with Prime Minister Jean-Marc Ayrault on this subject," the source said.

Hollande, whose election victory was due in large part to voters' fatigue with former President Nicolas Sarkozy, unfulfilled promises of a rapid economic upturn and more jobs, argued that the rich should participate in restoring France's public finances that could help the government to avoid growth-sapping austerity measures.

Via high taxes on the rich, he wants to cut the public gap by 1.5 point percentage to 3 percent of GDP in 2013 by collecting more than 30 billion euros.

Announcing 75 percent tax proposal, Hollande has provoked a fresh deluge of criticism from the opposition and business leaders who warned that such move will force the wealthy and talent to flee the country.

"I solemnly call Francois Hollande to learn from his failures and change his policies. It's necessary for Hollande in 2013 to be aware of his duty and finally undertake courageous reforms that we need," Jean-Francois Cope, the head of the conservative Union for a Popular Movement (UMP) said in a statement.

Gilles Carrez, chairman of the National Assembly's finance commission, expressed his satisfaction with the Constitutional decision that "gives back a normal character to our tax policy."

However, the Socialists will "not give up" and "will propose new measures on revenue ... to be applied in 2013 and 2014," Finance Minister Pierre Moscovici stressed.

The rejected measures that represent up to 500 million euros will not affect the government's financial recovery path, the minister added.

Facing a grim economic climate with unemployment at a 15-year high exceeding 10 percent, Hollande has insisted to reach 0.3-percent growth this year and to quicken the GDP by 0.8 percent in 2013.

But, if he fails to deliver on his presidential vision, the Socialist president in 17 years could ran out of steam and end up as his predecessor who quit the Elysee Palace with record low popularity and disliked policies. (1 euro = 1.32 U.S. dollars)

Related:

French top court overturns 75-pct upper tax rate, Hollande reacts "calmly"

PARIS, Dec. 29 (Xinhua) -- French President Francois Hollande "calmly" welcomed the Constitutional Council's decision of cancelling the 75-percent upper tax rate, asking the government to prepare a new measure.

French channel BFMTV reported the news, citing the entourage of the head of state as saying that "President heard the news calmly, it was one of the possible hypotheses." Full story

Editor: Fang Yang
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