Hollande vows to find a way to tax top earners

FRENCH President Francois Hollande has vowed to stick to plans to raise the tax rate for top earners after his scheme to set a 75 per cent tax rate for those with €1m (£812,000) a year incomes was rejected.

In a New Year’s Eve national address Hollande said the law would be redesigned to “ask more of those who have the most”.

But his failure to mention the 75 per cent rate again has prompted speculation the plan will be watered down or dropped.

“I suspect this tax will be shelved,” said Philippe Gudin, an economist for Barclays and a former French treasury official.

“For the [low amount of] revenue it would raise, the outcry it has provoked and the damage it has done to France’s image, it would be more sensible if it were quietly buried.”

The Socialist president’s initial scheme – a flagship campaign promise – was thrown out by France’s Constitutional Council on Saturday on technical grounds. The council ruled it unfair because, unlike other forms of income tax, it would apply to individuals rather than households.

Although the proposed tax rate would only have applied to a few thousand people, it caused widespread anger among business leaders and the right-wing opposition, and has led to some wealthy citizens, like actor Gerard Depardieu, to say they would emigrate.

Meanwhile Prime Minister David Cameron has promised to “roll out the red carpet” to French businesses relocating to the UK.

Hollande, whose approval rating has dropped to around 35 per cent since he took office in May, also promised in his speech to make “all efforts” towards cutting unemployment.

The jobless tally reached 3m – around 10 per cent of the workforce – for the first time last year.

Hollande said: “All our powers will be bent towards a single goal – inverting the unemployment curve within a year from now. We must succeed at all costs.”