France unveiled on Friday what it describes as its toughest budget ever, which includes a 75% tax on millionaires in an attempt to tackle its deficit.

France unveiled on Friday a new budget that includes a 75% tax on millionaires. (photo: badlyricpolice via Flickr) "It's a combat budget to fight against a debt that only continues to increase and that rests on the shoulders of French taxpayers and generations to come," Prime Minister Jean-Marc Ayrault said Friday morning.

The Guardian notes that the new "suptertax," a two-year 75% tax rate on earned income for people earning more than €1m a year, "is expected to hit only 2,000 taxpayers. A new 45% income tax band is to be introduced for those earning more than €150,000 a year."

"We're asking the wealthiest taxpayers to make an effort," Ayrault added after a cabinet meeting. "As for companies, we're bringing back justice. CAC-40 firms pay less taxes than small companies…now we're asking them to contribute."

But the budget also includes austerity measures for France's middle class.  CNN reports that "A third of the savings will come from cuts to public spending."  The BBC notes that the cuts to public spending are set to increase:  "While the cuts in 2013 will be two-thirds comprised of tax increases and one-third from spending cuts, the government said that from 2014 it would be divided equally."

The Guardian adds that the budget also "commits the government to an austerity program that will be unpopular with leftwingers in the party, at a time when unemployment is rising and the economy teeters on the brink of recession." Economist Nouriel Roubini remarked that President "Hollande was not elected by his base to pursue austerity and reforms, but rather to boost growth and hiring in the public sector." 

The government's goal to cut the annual deficit to the eurozone limit of 3% of GDP next year won't come without growth, Pierre Laurent, national secretary of the French Communist party, says, and adds that "the budget will rather worsen the situation, because we know that the current austerity recipe is pushing the economy into a recession."

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