Sarkozy's Presidential Rival Outlines Fiscal Pledges

by Ulrika Lomas, Tax-News.com, Brussels

02 February 2012

French Socialist (PS) candidate for the Elysée, François Hollande, has recently unveiled details of his presidential election programme, containing a raft of fiscal measures, designed to stimulate the economy, to support small- and medium-sized companies (SMEs) in France, and to reduce the public deficit to 3% of gross domestic product (GDP) in 2013.

To achieve his objective of redressing the public finances, and returning to budgetary balance by the end of the mandate, Hollande intends to abolish the “tax gifts” and multiple tax breaks (les niches fiscales) that have benefited the wealthiest households and largest companies in France over the last ten years. According to Hollande, such a reform will serve to generate EUR29bn (USD38.3bn) in additional revenues.

Other proposals outlined in the programme include plans to separate investment banking activities from speculative operations, and to ban French banks from operating in jurisdictions deemed to be uncooperative in tax matters. In accordance with the proposals, stock options would be abolished, except for start-up companies, and bonuses limited.

François Hollande also plans to tax the profits of banks by increasing their rate of taxation by 15%, and to create a tax on all financial transactions.

Determined to promote the development of SMEs as a matter or priority, Hollande plans to set up a public investment bank, and to introduce measures intended to help finance SMEs and innovative businesses. The presidential candidate also aims to ensure that the research tax credit is made simpler and more accessible for SMEs, very small companies (TPE), artisans and traders.

In a bid to promote production and employment in France, Hollande plans to orientate financing, public aid and tax reductions towards companies electing to invest in France. Under the plans, three different rates of corporate taxation would be introduced, notably a 35% tax rate imposed on large companies, a 30% tax rate levied on SMEs and a 15% tax rate for very small companies.

As regards individuals, Hollande has already announced plans to establish a new 45% top rate of income tax, and to reinstate the original ISF wealth tax scale.

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