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French socialists soak the rich

France’s new socialist government is pushing ahead with highly popular promises to make the rich and corporations shoulder a far greater burden of the costs of the economic crisis. There will be a big one-off increase in wealth taxes and surcharges on banks and energy companies in the country’s supplementary 2012 budget. An extra €2.3bn will be raised by an exceptional tax charge on all those with net wealth of more than €1.3m.

President Francois Hollande’s election pledge of a 75% marginal rate on annual incomes of more than €1m – and permanent increases in wealth taxes – will be detailed in the autumn.

This year, including the wealth tax and a smaller increase in inheritance and gift taxes, the better-off will bear the lion’s share of the additional €3.4bn to be raised from households.

Taxes on business will raise €2.9bn, including a €550m surcharge each on petroleum stocks held by energy companies and on banks, a 3% tax on dividends and an increase in the taxation of bonuses and stock options. Overall, public spending as a proportion of GDP, second only to Denmark in Europe, will rise slightly this year to 56.2%, before falling slowly to 53.4% in 2017.

Amid rising wealth equality, polls show the French people strongly back the socialists’ redistribution policies.

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