France to raise taxes on top 10%
France’s Prime Minister Jean-Marc Ayrault has said that 9 out of 10 citizens will not see their income taxes rise in the new budget.
He has confirmed that there is to be a new 75% tax rate for people earning more than 1 million euros ($1.3 million) a year.
Jean-Marc Ayrault has not yet detailed how much taxes will rise for the rest of the top 10%.
It is one of the key policies in what he called “a courageous, responsible budget – a budget of conquest”.
The government’s priorities were young people, training and cutting 10 billion euros from its spending, he said. This would demand an effort but would be fair, he added.
It was 89.3% at the end of March, which was still well above the eurozone limit of 60%.
Jean-Marc Ayrault pointed out that debt had grown by 30% of GDP in the past five years and that the debt threatened future generations.
He also said that the budget would encourage small and medium businesses and that taking risks would also be encouraged.
In its first budget, the Socialist government repeated its promise to cut the annual deficit to the eurozone limit of 3% of GDP next year.
The deficit this year is expected to be 83.6 billion euros, which is 4.5% of GDP.
Jean-Marc Ayrault said that France was strong when it set itself ambitious targets.
But some analysts said that the targets were too ambitious because they assumed too much growth for the coming years.
They said that tax increases and spending cuts would make it difficult to achieve the 0.8% growth in 2013 and 2.0% growth in 2014 that are predicted by the budget.
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