The new taxes for rich people will operate in France starting in 2013.Every Frenchman, whose annual income is more than 1 million EUR will be required to pay 75% tax on the proceeds.According to the French authorities, this decision contributes to reducing the national debt.
Online PR News – 10-October-2012 –In July, the new Prime Minister Jean-Marc Ero urged the country to radical measures to stabilize the weak economy, burdened by "unsustainable" public debt at € 1,8 trillion. From the point of view of the prime minister, wealthy citizens should play a more active role in saving the country. The current president Francois Hollande holds a similar opinion. He believes that the incomes of € 150 thousand should be taxed at 45%, and the incomes of more than a million € should be taxed at 75%. Francois Hollande promised to restore the economy of France in two years achieving this primarily by raising taxes. Over the next two years a 75% tax on profits will apply to millionaires. Francois Hollande calls on the rich to show their patriotism and help the country in difficult times. According to him, the new tax is meant not so much to replenish the treasury, but to allow people with money show their civic standpoint.
Some of them have already "begun to show patriotism." A French billionaire Bernard Arnault, who owns 46% of LVMH, the wealthiest person not only in France but also in Europe and fourth richest in the world, has decided to change to a Belgian citizenship. He explained his decision to the journalists saying that he needed the Belgian passport only for business, and he still stays a tax resident in France. There are also a few other examples of non-patriotism. Weekly Le Nouvel Observateur reported that Schneider Electric president of the board of directors Jean-Pascal Tricoire moved to Hong Kong, and honorary president of L `Oreal Lindsay Owen-Jones, who was hounded by taxmen during the presidency of Nicolas Sarkozy, also lives in the Swiss town of Lugano from June.
At the same time, Hollande’s criticists said that the meaning of a new tax is more political than economic. The point though is that 60% of French people are dissatisfied with the first four months of the Hollande’s presidency, therefore he had to fulfill a campaign promise, which made him a leader of the presidential race, eliminating Nicolas Sarkozy when the sympathy of the public had already started to lean toward the latter.
Harris Interactive political analyst Jean-Daniel Levy said, the windfall profits tax is very popular among the ordinary citizens of France, because they don’t really like big companies and feel no pride in being home to these large national companies.
At the same time, according to the financial advisor Dmitry Chernavski, Hollande’s solution is hardly economically feasible. The free movement of capital and the absence of financial barriers to the EU could lead to re-scaling the largest taxpayers and stripping assets from France, said Dmitry Chernavski, "The example of the biggest billionaire Bernard Arnault moving to Belgium, shows that business tycoons are predominantly international, and it allows them to easily get away from the French law" emphasizes Dmitry Chernavski.
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