Hollande hikes taxes as rich flee for London

 
Tim Wallace
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FRENCH PRESIDENT Francois Hollande last night confirmed plans to raise taxes, particularly on the rich, as he fights to return the country to full strength within two years.

Those earning more than €1m a year will be hit by a 75 per cent marginal rate, Hollande confirmed, with “no exceptions”. However, the levy could be dropped after two years if France’s economy recovers as hoped.

“I am setting up a calendar ... two years to create a policy for work and competitiveness. I am accelerating,” he told TF1 television.

However, the socialist leader warned that growth next year is set to be lower than expected, at around 0.8 per cent rather than 1.2 per cent.

And the tax hikes might not be able to rinse the rich in the way he hopes – fear of the socialist’s policies has been driving wealthy and high-earning families out of the country, with estate agent Savills today reporting rising house prices in London and falling prices in Paris as a result.

And France’s richest man, LVMH boss Bernard Arnault, was forced to deny he was becoming a Belgian citizen to avoid the incoming taxes.

Attempting to defuse the row over taxation, Arnault insisted that while he wants dual citizenship, he will remain in France and pay taxes there.

House prices in London rose 2.8 per cent in the last year, while those in Paris dropped 3.4 per cent – the worst performance of any global city, according to Savills.

“The Eurozone crisis continues to discourage investment in euro-denominated assets, and the market has been dealt a double blow by President Hollande’s proposed increases to taxes on high end property and investor gains,” said the estate agent’s report.

“Further price falls now seem unavoidable in the French capital, and London is the potential beneficiary as international money seeks an alternative haven within the geography of Europe, but outside the Eurozone.”