S'il Vous Plait: France to Tax Corporations and Wealthiest to Address Budget Gap

France's President Francois Hollande outside the Elysee Palace in Paris on July 4, 2012. (REUTERS/Philippe Wojazer)

S'il Vous Plait: France to Tax Corporations and Wealthiest to Address Budget Gap

As he promised throughout his presidential campaign, Francois Hollande on Wednesday introduced a new 2012 corrective budget that calls for, among other measures, a one-off tax levy on the nation's wealthiest individuals and large corporations to help address the nation's current financial woes.

"We face an extremely difficult financial and economic situation," Finance Minister Pierre Moscovici said at a press conference in Paris. "The wealthiest households, the big companies, will be asked to contribute. In 2012 and 2013, the effort will be particularly large."

According to Reuters, the taxes on individuals will target those with net wealth of more than 1.3 million euros (or $1.63 million) and aim to raise nearly 2.3 billion euros ($2.90 billion) in this budget cycle alone. The levy focused on large banks and oil-related energy firms is designed to bring an additional 1.1 billion euros. Both increases are part of a scheme to close what the nation's state auditor says is a 6-10 billion euro budget gap in 2012. Other measures include the lifting of a payroll tax holiday and a levy on dividends and stock options.

The tax rate for those making over $1 million (1.3 million euro) will be 75% come 2013

Hollande, according to a Bloomberg report, has said the 2013 budget will restore the pre-Sarkozy wealth tax rates on people with assets of more than 1.3 million euros. That will return the rate to 75% for those making over $1 million.

It is not all good news, however, for those glad to see the wealthiest paying a larger share of the financial burden as indications from the French government acknowledge that budget cuts will also be part of an ongoing budget-trimming process. Some observers worry that one-off taxes levied on the wealthiest and the corporations do not address systemic inequities and contend that the measures are only being implemented as a way to pave a path for more public austerity.

"The immediate effort will come from tax revenues but there will be an effort on spending during the rest of the government's term," Budget Minister Jerome Cahuzac said at the news conference.

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