France’s highest court today gave President Francois Hollande the green light to introduce a top tax rate of 75 per cent. After months of wrangling, the Constitutional Council said the controversial proposal by the Socialist president was within the law. It has already led to entrepreneurs and celebrities leaving France, but Mr Hollande is determined to see the policy implemented. Now companies will have to pay 75 percent tax on all annual salaries exceeding one million euros, the equivalent of £830,000.
The Council originally rejected the measure in March, saying that it was against the law to levy taxes on individuals, rather than on households. But in a ruling published on Sunday, the council said a reformulated tax ‘conforms with (France’s) constitution’. Employers will now have to pay 50 per cent income tax on salaries they pay above €1m, or £830,000. Social charges will bring the effective rate up to 75 per cent. The tax will apply for incomes paid this year, 2013, and in 2014. Mr Hollande has admitted that he ‘dislikes the rich’, but insisted his new tax did not aim ‘to punish’ them.
He said he hoped it will encourage companies to lower executive pay during tough economic times. But it comes as the French economy veers from crisis to crisis – all of them blamed on Mr Hollande’s mismanagement. A
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The number of unemployed spiraled to 3.29 million this month, representing a year-on-year increase of 5.6 per cent. Beyond the sky-high job rate and rocketing cost of living, Europe’s second largest economy fell by 0.1 per cent in the third quarter of this year. This was while Britain’s economy grew by 0.8 per cent, and Germany’s by 0.3 per cent. Mr Hollande is by far the most unpopular president in the recent history of France, according to all recent polls. His disastrous handling of the economy has seen hundreds of thousands regularly staging public demonstrations against him. Earlier this month, France was branded the new ‘sick man of Europe’ amid fears it may slip back into recession. ‘France looks increasingly like the new sick man of Europe,’ said Markit’s Chris Williamson, while others warned that the 75 per cent tax rate will see more talent flooding out of France. In another devastating analysis this month, ratings agency Standard & Poor highlighted the risks to the French economy posed by weak economic growth, high unemployment, the rising national debt and ‘elevated’ levels of tax and spending
So Mr ‘Presidents’, hows that great Socialist dream working out for you both? The peasants have no bread “Qu’ils mangent de la brioche” translated “Let them eat cake“… ‘Cheers’ Yours Aye.