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Today’s Top Headlines

French President Hollande Unveils Tax 'Offensive'

by Ulrika Lomas,, Brussels

20 May 2013

During his second press conference since entering office last year, French President François Hollande defended his economic, fiscal, and social policies, and outlined his tax offensive for the coming year.

President Hollande welcomed "as a good signal" the European Commission's decision to allow France to "adapt the speed of fiscal consolidation to the economic climate." Confirming that France will now be granted a further two years in which to meet its 3 percent deficit target, Hollande stressed that this is an opportunity for faster recovery. Growth will enable France to exit the crisis and to end the recession, Hollande insisted.

The French President emphasized that the "ideal" would be not to increase taxes for individuals in France next year, beyond the value-added tax (VAT) rise planned for 2014. Hollande did not rule out the idea of increasing pension contributions or further reducing tax breaks, however.

Expressing his "gratitude" to the huge effort made by French citizens to redress the public finances, in particular France's wealthiest, President Hollande underscored that the greater the extent of Government expenditure cuts, the less will be demanded in taxes from individuals in future. Hollande nevertheless confirmed that plans for a 75 percent tax imposed on salaries in excess of EUR1m (USD1.28m), payable by businesses in France, are to be included in the 2014 finance bill.

Alluding to the "unsustainable" pension deficit, which is expected to increase from EUR15bn currently to EUR20bn by 2020, Hollande stressed that the pension contribution period will have to rise. Given that people are now living longer, it is therefore necessary to work longer, he said, warning that he would simply not transfer the burden of financing pensions onto future generations. The French President also evoked the idea of aligning private and public sector pensions, particularly as regards the basis for calculating pensions.

Finally, President Hollande confirmed plans to modulate family allowance, to ensure that the country's affluent families are not entitled to the same allowance as lower income earners. Hollande also pledged to implement measures in time, aimed at aligning the general social contribution (CSG) and individual income tax bases.

TAGS: individuals | tax | business | pensions | European Commission | value added tax (VAT) | public sector | corporation tax | tax rates | France | tax breaks | tax reform | individual income tax | European Union (EU) | Europe

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