Yesterday evening the French were given a sting on live television. The president of the Republic, Francois Hollande, announced that next year households and businesses will have to pay taxes for 20 billion euros more than expected. In total, the crackdown in 2013 will exceed i 35 billion euros, also considering the cuts in state spending for 10 billion euros.
A huge effort, but necessary to reduce the public deficit to 3% of GDP (this year it is 4,5%), as required by the European fiscal compact. The heavier tax burden certainly won't do any good for growth, which has already recorded a marked slowdown and should not exceed +2012% in 1.
Hollande reiterated that the tax increase will primarily concern "the luckiest" among companies and households and explained that he did not want to take measures that "could discourage consumption". Income exceeding 150 euros will be taxed at 45%. Those exceeding one million euros to 75% for the part exceeding this sum. Hollande has confirmed that he wants to tax capital returns like those for work, but has not yet explained how.
