Many told me that French president Francois Hollande was making idle campaign pledges on tax hikes and worker rules, and the he would not follow through. Well he did, at least on taxes.
The Financial Times reports Wealthy hit hardest as France raises taxes
France’s socialist government announced a big one-off increase in wealth taxes on Wednesday, by far the biggest single element in a €7.2bn package of new levies aimed at meeting this year’s budget deficit target that also included surcharges on banks and energy companies.
The supplementary 2012 budget, required to ensure the government hits its deficit target of 4.5 per cent of gross domestic product this year, was weighted overwhelmingly towards taxes on the rich and big companies as ministers said planned spending cuts would mainly take effect from next year.
An extra €2.3bn will be raised by an exceptional tax charge on all those with net wealth of more than €1.3m.
Citing an “an extremely difficult financial and economic situation”, Pierre Moscovici, the finance minister, said: “The wealthiest households and the big companies will be asked to contribute. In 2012 and 2013, the effort will be particularly large.”
Further tax increases for next year, when the government is expected to have to find €33bn in savings to bring the deficit down to 3 per cent of GDP, will be spelt out in the autumn. They will include President Francois Hollande’s election pledge of a 75 per cent marginal rate on annual incomes of more than €1m – and permanent increases in wealth taxes.
Overall, public spending as a proportion of GDP, second only to Denmark in Europe, will rise slightly this year to 56.2 per cent before falling slowly to 53.4 per cent in 2017. The tax burden will, however, keep rising to 46.5 per cent – also one of the highest in Europe.
On June 16, in "France Has At Most Three Months Before Markets Make Their Mark" says German Official I wrote ...
If socialists take control of both houses in French parliament as expected, president François Hollande would have free rein to carry out his stated policies such as hire more public workers, raise taxes on the rich, and Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It"Socialists did win both of Parliament.
Now that Hollande has followed through on his pledge to hike taxes, there is every reason to believe he will follow through on his inane proposal to make it nearly impossible for businesses to fire people. If he continues with that promised path, France will implode.
Mike "Mish" Shedlock