Article brought to you by: Catholic Online (www.catholic.org)

Businesses, not employees to foot 75 percent tax increase in France

By Catholic Online (NEWS CONSORTIUM)
May 24th, 2013
Catholic Online (www.catholic.org)

In a surprise announcement, businesses, and not employees will foot the bill for a new 75 percent tax on salaries over €1 million. In other announcements made by French Finance Minister Pierre Moscovici, a plan to cap directors' pay has been dropped.

LOS ANGELES, CA (Catholic Online) - The 75 percent tax on employees' salaries above €1 million a year is set to be introduced by the country's government in 2014.

The government has stopped short of introducing a cap on executive pay in the private sector, Moscovici said in a newspaper interview. The new tax will be submitted before the country's parliament as part of next year's budget and will stay in place for a period limited to two years.

"After several months of consultation, I decided to focus legislative action on the contribution of 75 percent tax on wages exceeding €1 million, to be paid by the employer," the finance minister told reporters. "We will not go beyond that: there will be no specific law on the governance of companies."

The decision represents a bid by France's ruling Socialist Party to save one of President François Hollande's flagship policies after he came to power last year. The new president had initially promised to introduce a so-called "super-tax" on wages above €1 million, to be paid directly by earners themselves.

The president regretfully was forced to return to the drawing board after France's highest legal body, the Constitutional Council, overturned the policy. The gesture was criticized as "excessive" and a "breach of equality of taxes."

The president then later revealed in a TV interview in March that the policy would be repackaged with a greater degree of the tax burden placed on employers, but did not go into further detail.

There will be the expected critics, who believe higher corporate taxes could hinder business growth at a time when the French economy is struggling and unemployment is at record highs.

France's economy last month had officially fallen back into recession with GDP dropping by 0.2 percent in the first quarter of 2013 following a similar fall in the final quarter of last year.

The number of unemployed workers in France rose to 3.22 million in March, beating a previous record high set in 1997.

Moscovici insisted that helping businesses remains "at the heart of our economic policy . We want to help create wealth and jobs, to invest and hire," he said.

Article brought to you by: Catholic Online (www.catholic.org)