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French President Francois Hollande in London Sept. 6, 2012. (POOL/REUTERS)
French President Francois Hollande in London Sept. 6, 2012. (POOL/REUTERS)

French ‘millionaire’ tax not so rich after all Add to ...

A hefty tax on France’s top earners that President Francois Hollande had touted as a key measure of his election campaign may be less tough on the rich than originally expected, Le Figaro daily reported on Thursday.

The right-leaning paper gave no indication of the source for its report, other than to say it was “according to our information.” A source at Mr. Hollande’s office said no decision had been taken as to how the proposed new tax rate would be applied.

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“There are several scenarios on the table as regards the tax base, the terms,” the source said. “The question should be settled by the start of next week.”

Mr. Hollande drew both cheers and criticism when he announced plans for a 75-per-cent tax on revenue exceeding €1-million ($1.26-million) per year during a live television appearance in February, to the surprise of many in his own party.

While little was known of how the tax would work in practice, many in France assumed it would apply to income from salary and capital gains because Mr. Hollande had said during his campaign that both should be taxed equally.

But Le Figaro reported that it will apply only to income from salaries and not to capital gains. Couples whose combined income is less than €2-million per year will not have to pay the top rate, it said without citing sources.

Les Echos newspaper said that the CSG and CRDS social charges would be included in the 75-per-cent tax rate and would not come on top of it, as originally expected.

The reports appear to further water down the impact of a tax whose impact was always mainly symbolic, with only 3,000 people concerned and a negligible effect on state revenue as France seeks to reduce a huge budget deficit.

Mr. Hollande’s Socialist government will include the tax in its 2013 budget due to be unveiled later this month, which aims to save some €30-billion to keep France in line with European deficit-reduction targets.

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