New plan to tax highest earners

FRANCE'S highest-earning residents could be hit with a new tax under plans to be examined by the government after the summer break.

According to Les Echos, a new levy of 1% or 2% could apply to the 30,000 French residents whose total assessable income after allowances (revenu fiscal de référence) exceeds €1m a year.

It is one of the options being considered by a working group led by finance minister François Baroin and budget minister Valérie Pecresse, which was formed last month and will meet at the end of August and in early September to explore the ideas further.

President Sarkozy has repeatedly pledged not to add a new upper band to the income tax rates. He is expected to reach a decision on the new levy early this autumn.

France recently scrapped its bouclier fiscal tax cap, which limited an individual's personal tax burden to 50% of their total income. The government has also increased the threshold above which a household has to pay wealth tax.