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France Eyes 75% Tax In 2013

by Ulrika Lomas, Tax-News.com, Brussels

11 July 2012


French Budget Minister Jérôme Cahuzac has recently confirmed that the government is currently considering its plans for a 75% tax imposed on income in excess of EUR1m (USD1.3m), emphasizing that the measure will be in force in 2013.

The government is currently reflecting on its plans and there will be a provision in the initial 2013 finance bill, due to be presented in September, Cahuzac revealed, while hinting that the tax might not come in the form of a new top rate of income tax.

Underscoring the need to “reflect on the base” of the tax to ensure that it does not “constrain the economy”, the minister also said that it is imperative to take into account the principal of equality.

Cahuzac indicated that there could be a difference in the tax treatment of individuals, differentiating between those whose income is “guaranteed, certain, without risk” and those whose income is not assured, for example in the case of artists, authors, researchers, entrepreneurs, and possibly even sportsmen.

Cahuzac defended the government’s plans for the tax, highlighting the fact that the proposal was well received in the presidential election campaign, and underscoring the need for a notion of equality as regards the efforts and sacrifices that need to be made as a result of the ongoing crisis.

Equality is a powerful concept, a founding value of the French Republic, the minister argued, stressing that a very large majority of citizens in France are completely “exasperated” with the “indecent” remuneration received by some individuals.

French Socialist President François Hollande announced plans back in March during his election campaign to introduce a top rate of income tax in France of 75%, imposed on income in excess of EUR1m a year.

Although Hollande had previously unveiled election plans to levy a 45% rate of tax on income above EUR150,000, after further consideration, the presidential hopeful later decided to create an additional 75% rate of tax imposed on “indecent” remuneration of over EUR1m.

Denouncing existing injustices, and citing the interest of fairness at the time, Hollande also called for income from capital to be taxed at the same tax rate as income from work, using the same income tax scale.

TAGS: individuals | tax | artists | entertainers | entrepreneurs | employees | sportsmen | self-employment | tax rates | France | individual income tax

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