(President Francois Hollande)
With legislative elections pending you would be mistaken if you thought French President Hollande might go easy on the tax hikes.
Determined to make good on his promise to banish austerity Hollande is set to unleash a suite of tax measures targeting savings, wealth and top-income earners.
Ignoring spending cuts demanded by his General Inspectorate of Finances to reach the EUR3.9Bn in annual savings required to balance the books, the French Head of State has provided important clues about how his brand of ‘tax reform’ will create French ‘social justice’.
Headlining Hollande’s tax reform package is a proposed 75% income tax and a revision (likely upwards) of the solidarity tax on wealth.
His reform plans are not just limited to the ‘personal’ income of France’s most wealthy but could see the 75% rate apply to the gains realised on the sale of a company if in excess of EUR1m. In addition plans are in train for tax breaks to be capped at EUR10, 000 per year compared to EUR18, 000 plus 4% of income.
Isn’t 75% Unconstitutional?
Mais non! To pre-empt argument that such a high rate of tax is ‘confiscatory and contrary to the French constitution, Hollande proposes to reintroduce the ‘Rocard Cap’ which stipulates that the sum of income tax, wealth tax and social contributions must not exceed 85% of household income.
Is the only way to describe Hollande’s approach fresh from receiving a not so overwhelming mandate from a divided French electorate and on the heels of more elections where though his party is favoured cannot be counted as a foregone conclusion.
As for his wealthy French compatriots, Hollande seems content to wish them “Au revoir et bonne chance!”