€2.3bn bill for the wealthy

Budget gets rid of tax breaks and targets well-off in bid to raise €7.2bn and cut €1.5bn from spending

19 July 2012
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WEALTHY taxpayers will stump up €2.3billion after MPs voted through the supplementary budget for 2012 which imposed a "one-off" wealth tax as part of measures to raise €7.2bn and cut €1.5bn from spending.

After four days of ferocious debate, with UMP MPs challenging the socialists' plans to kill off key Sarkozy measures such as tax breaks for the well-off and for overtime working, the National Assembly passed the budget just after 5.30 this morning.

It is intended to reduce France's deficit from last year's 5.2% of GDP to 4.5% this year and 3% in 2013 and is the first budget law by President Hollande's government.

The one-off wealth tax measure is intended to eliminate the effect of this year's changes to the wealth tax by the Sarkozy government which lightened the bill for the usual tax for many payers, especially the richest. The government plans to toughen up the ordinary tax again for next year.

The one-off tax applies to those worth more than €1.3m and means many of those with fortunes of over €4million may pay double what they expected this year.

Elsewhere, the budget:
* toughens up the rules on inheritance by reducing the €159,000 tax-free allowance for each child to €100,000;
* imposes a 3% surtax on cash dividends;
* doubles the incoming financial transactions tax to 0.2%;
* sets a 4% tax on the value of stocks of oil-based products in France to raise €500m
* increases the tax on company savings schemes, stock-options and share handouts - which could raise €550m this year and €2.3bn next
* cuts VAT on books and live entertainment to 5.5% from 7%
* and gets rid of the €30 payment demanded from foreigners who get the Aide Médicale d'Etat (free healthcare for illegal immigrants).

Budget Minister Jerome Cahuzac said the budget was "a tough effort asked of those who can afford it" but former Sarkozy education minister Laurent Wauquiez called it a "rip-off" that would cut 7% off the incomes of 9.5million people.

MPs refused to back plans for checks on their expenses and called on National Assembly president Claude Bartolone to come up with proposals.

Plans for the 75% tax rate on annual incomes of over €1m will be revealed later and Budget Minister Jérôme Cahuzac said it would be changed once the country's debt was cleared.
Photo: David Monniaux

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