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France introduces new tax on high incomes | France introduces new tax on high incomes |
(40 minutes later) | |
The French government is to impose an extra tax of 3% on annual income above 500,000 euros (£440,000; $721,000). | The French government is to impose an extra tax of 3% on annual income above 500,000 euros (£440,000; $721,000). |
It is part of a package of measures to try to cut the country's deficit by 12bn euros over two years. | It is part of a package of measures to try to cut the country's deficit by 12bn euros over two years. |
The tax increase came after some of France's wealthiest people had called on the government to tackle its deficit by raising taxes on the rich. | The tax increase came after some of France's wealthiest people had called on the government to tackle its deficit by raising taxes on the rich. |
Paris has also reduced its economic growth forecast for 2012 to 1.75% from a previous 2.25%. | Paris has also reduced its economic growth forecast for 2012 to 1.75% from a previous 2.25%. |
'Rigorous' | 'Rigorous' |
And it has cut its 2011 growth forecast from 2% to 1.75%, Prime Minister Francois Fillon has said. | And it has cut its 2011 growth forecast from 2% to 1.75%, Prime Minister Francois Fillon has said. |
He said the new tax would remain in place until France reduces its budget deficit back under the EU's intended limit of 3% of GDP, which should occur in 2013. | He said the new tax would remain in place until France reduces its budget deficit back under the EU's intended limit of 3% of GDP, which should occur in 2013. |
France plans to trim its public deficit to 5.7 % this year, 4.6 % next year and 3% in 2013. | France plans to trim its public deficit to 5.7 % this year, 4.6 % next year and 3% in 2013. |
"This is a rigorous policy that will allow France to remain relaxed," Mr Fillon said. "Our country must stick to its [deficit] commitments. It's in the interest of all French people." | "This is a rigorous policy that will allow France to remain relaxed," Mr Fillon said. "Our country must stick to its [deficit] commitments. It's in the interest of all French people." |
Faced with flat growth, the persistent threat to the country's precious AAA rating, and all sorts of turmoil on the nervous financial markets, President Sarkozy is wielding the axe. | |
In total he's proposing 12bn euros of savings over the next two years. | |
Higher taxes for big companies, a cap on tax deductions applying to overtime - and a new "special contribution" from the wealthiest in the country. | |
It's a U-turn - in so many ways - designed to reassure investors and voters alike that only he can be trusted with the French economy. | |
Sixteen executives, including Europe's richest woman, the L'Oreal heiress Liliane Bettencourt, had offered in an open letter to pay a "special contribution" in a spirit of "solidarity". | Sixteen executives, including Europe's richest woman, the L'Oreal heiress Liliane Bettencourt, had offered in an open letter to pay a "special contribution" in a spirit of "solidarity". |
It appeared on the website of the French magazine Le Nouvel Observateur. | It appeared on the website of the French magazine Le Nouvel Observateur. |
It was signed by some of France's most high-profile chief executives, including Christophe de Margerie of oil firm Total, Frederic Oudea of bank Societe Generale, and Air France's Jean-Cyril Spinetta. | It was signed by some of France's most high-profile chief executives, including Christophe de Margerie of oil firm Total, Frederic Oudea of bank Societe Generale, and Air France's Jean-Cyril Spinetta. |
They said: "We, the presidents and leaders of industry, businessmen and women, bankers and wealthy citizens would like the richest people to have to pay a 'special contribution'." | They said: "We, the presidents and leaders of industry, businessmen and women, bankers and wealthy citizens would like the richest people to have to pay a 'special contribution'." |
They said they had benefited from the French system and that: "When the public finances deficit and the prospects of a worsening state debt threaten the future of France and Europe and when the government is asking everybody for solidarity, it seems necessary for us to contribute." | They said they had benefited from the French system and that: "When the public finances deficit and the prospects of a worsening state debt threaten the future of France and Europe and when the government is asking everybody for solidarity, it seems necessary for us to contribute." |
They warned, however, that the contribution should not be so severe that it would provoke an exodus of the rich or increased tax avoidance. | They warned, however, that the contribution should not be so severe that it would provoke an exodus of the rich or increased tax avoidance. |
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