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Sunday 22.07.2018 | Name days: Marija, Marika, Marina

France favours increased taxes over spending cuts

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France has unveiled its budget for 2013, avoiding big austerity spending cuts in favour of higher taxes on the wealthy and big businesses.

French Prime Minister Jean-Marc Ayrault confirmed that there is to be a new 75% tax rate for people earning more than 1m euros (£800,000; $1.3m) a year. But he insisted that nine out of 10 citizens will not see their income taxes rise in the new budget, BBC reported.

The government plans to raise 20bn euros in extra revenue. That compares to 10bn euros in spending cuts.

The emphasis on tax rises is a policy of the new French President Francois Hollande that is against the prevailing mood of Europe where countries from Ireland to Greece are slashing spending to try to placate investors and lower borrowing costs.

Measures in the budget include:

– A new 75% tax on the richest earning more than 1m euros

– A 45% income tax rate on incomes over 150,000 euros a year

– A freeze in government spending, excluding debt repayments and pensions

– The elimination of a ceiling on “l’impot de solidarite sur la fortune”, or wealth taxes, so that assets of more than 1.3m euros will be taxed at 1.5%

– The reduction of tax exemptions for loan payments by large corporations

– Capital gains and dividends will now be subject to the income tax regime

Budget includes also hiking of the excise duty on beer. At the moment, the excise on beer amounts to EUR 2.75 per 100 litres. The government envisages some 15% increase. According to French brewers, the measure will affect the end-price of the product, as a standard doze of beer at the bars and pubs – for 250ml, will be increased by around EUR 0.05, according to Focus News Agency.

In its first budget, the Socialist government insisted 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 83.6bn euros, which is 4.5% of GDP.

Official figures on Friday showed that French public debt had hit 91% of GDP between April and June this year, up from 89.3% at the end of March, which was still well above the eurozone limit of 60%.

Mr Ayrault pointed out that debt had grown by 30% of GDP in the past five years.

Ref.110.110.110.2148


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  1. Oddis says:

    Good luck, France! To raise taxes and hurt productive people seems to be the only rational thing to do npw!

  2. Walters says:

    Anyway better live in France than Latvia.

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