France’s top constitutional body on Saturday struck down a 75 percent upper income tax rate, dealing a major blow to French Socialist President Francois Hollande, who had made it his centerpiece tax measure.
The government vowed to push ahead with the tax rate, which would apply to incomes over 1 million euros (US$1.3 million) a year, and propose a new measure that would conform with the constitution.
The tax rate had angered business leaders and prompted some wealthy French citizens to seek tax exile abroad, including actor Gerard Depardieu, who recently took up residency in Belgium.
The Constitutional Council said in its ruling that the temporary two-year tax rate, due to take effect next year, was unconstitutional because unlike other forms of income tax it applied to individuals instead of whole households.
As a result, the council said, the tax rate “failed to recognize equality before public burdens.”
Though largely symbolic — it would have applied to only about 1,500 individuals — the Socialists said the tax rate was aimed at making the ultra-rich contribute more to tackling France’s budget deficit.
The move was welcomed by the French Football League (LFP) which had expressed concern at the impact on top soccer players such as Paris Saint Germain’s Swedish star striker Zlatan Ibrahomovic.
LFP chairman Frederic Thiriez said if the measure had reached the statute book there could have been an “exodus of the best players” in the French league.
The 75 percent tax rate was a flagship promise of the election campaign that saw Hollande defeat right-winger Nicolas Sarkozy in May.
French Prime Minister Jean-Marc Ayrault said the ruling was a “symbolic, but not severe censure” and pledged to ensure the measure was adopted.
“The government will propose a new system that conforms with the principles laid down by the decision of the Constitutional Council. It will be presented in the framework of the next Finance Act,” he said in a statement.
“We want to maintain” the measure “because it symbolizes the need for the effort to be more fairly shared,” he added.
The French Constitutional Council also rejected new methods for calculating a separate wealth tax, striking down a provision that would have increased the amount of taxable revenues and capital gains.
Other new measures in the budget were approved, however, including an increase in some upper tax rates to 45 percent and the addition of capital gains to taxable income.
French Finance Minister Pierre Moscovici said the ruling “does not compromise” budget efforts and said the council had approved “the essential” of the government’s economic policies.
However, government critics hailed the ruling as proof the Socialists are pursuing unfair tax policies.
“While the whole world watched us in dismay, Francois Hollande deceived the French into believing that ‘taxing the rich’ would be enough to solve our country’s problems,” the head of the right-wing opposition UMP, Jean-Francois Cope said.
“In reality, discouraging entrepreneurs and punishing the most wealthy until they leave our country inevitably puts the tax burden on the middle class. This moral error was sanctioned today,” he said.
France is struggling to plug a 37 billion euro hole in its public finances to meet its target of reducing the budget deficit to the EU ceiling of 3 percent next year.
The 2013 budget included 12.5 billion euros in spending cuts and 20 billion euros in new taxes on individuals and businesses.
Critics have said the new tax measures will stifle economic growth, with the French economy already expected to contract by 0.2 percent in the final quarter of this year.
The 2013 budget is based on a government forecast of 0.8 percent economic growth next year — a figure many economists consider too optimistic.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last