France unveils tax raid on home owners, energy firms and banks

City A.M. Reporter
FRANCE’S new socialist government announced tax rises worth €7.2bn yesterday, including heavy one-off levies on wealthy households and big corporations.

In the first major raft of economic measures since Francois Hollande was elected president in May, the government singled out large companies and the rich.

British owners of second homes in France are set to be hit by higher taxes on rental income and capital gains tax on property sales.

Overall, an extraordinary levy of €2.3bn on wealthy households and €1.1bn in one-off taxes on large banks and energy firms were central parts of an amended 2012 budget presented to parliament.

The law, which includes tax increases on stock options and dividends and the scrapping of an exemption on overtime, should easily receive approval by a 31 July deadline after the socialists won a comfortable parliamentary majority at elections last month.

Hollande says the rich must pay their share as France battles to cut its public deficit from 5.2 per cent of GDP last year to an EU limit of three per cent in 2013 despite a stagnant economy and rising debt.

“We are in an extremely difficult economic and financial situation,” finance minister Pierre Moscovici said. “In 2012 and 2013, the effort will be particularly large. The wealthiest households and big companies will have to contribute.”

A grim assessment of public finances on Monday by the state auditor warned that €6-10bn of deficit cuts were needed in 2012 and a hefty €33bn in 2013.