FRENCH PRESIDENTIAL frontrunner François Hollande has set off an intense debate over how much tax the rich should pay with a surprise plan to tax top earners up to 75 per cent of their income.
Building on his campaign’s efforts to portray President Nicolas Sarkozy as the “candidate of the rich”, Mr Hollande said the new top rate and the reversal of Sarkozy-era tax breaks would “send out a signal, a message of social cohesion”.
The 75 per cent rate would apply to incomes of more than €1 million a year.
“I have seen the considerable progression in the pay of the CAC 40 bosses,” he said, referring to the benchmark French stock market index. “Two million euros [a year] on average. How can we accept that?
“It is patriotic to agree to pay a supplementary tax to get the country back on its feet.”
Taxing the rich has become a hot issue in an election campaign marked by concerns over the economic crisis and rising unemployment, which now stands at a 12-year high of almost three million people.
Needing to shore up the left-wing vote for the first round of voting on April 22nd, Mr Hollande has called the world of finance his “real adversary” and made anti-banking rhetoric a theme of his campaign.
His manifesto, published earlier this month, contains a pledge to impose a rate of 45 per cent on incomes above €150,000 a year.
The new plan drew sharp criticism from Mr Sarkozy’s UMP party. Budget minister Valerie Pécresse accused Mr Hollande of “inventing a new tax every week without ever proposing the smallest saving”, while foreign minister Alain Juppé denounced the idea as “fiscal confiscation”.
“And why not a 100 per cent rate?” was the sarcastic reaction of Marine Le Pen, the leader of the far-right National Front, who is in third place in the presidential race, according to opinion polls.
Some of Mr Hollande’s colleagues in the Socialist Party were wrong-footed by the candidate’s surprise announcement of the plan during a television appearance on Monday evening. On a different channel shortly afterwards, Mr Hollande’s adviser on tax and finance admitted he was unaware of the plan.
“You’re asking me about a statement I have not heard,” Jérôme Cahuzac said.
By keeping alive the topic of taxing the rich, the socialists hope they can keep attention focused on their portrayal of Mr Sarkozy as the candidate of the rich.
When Mr Sarkozy came to power in 2007, he introduced a “tax shield” that capped an individual’s tax at 50 per cent of all income.
He also cut inheritance and other taxes on the highest earners early in his term before reversing some of those measures as part of efforts to address the huge budget deficit in the past six months.
The latest opinion poll, published yesterday by the Institut français d’opinion publique (Ifop), indicated that Mr Sarkozy had narrowed Mr Hollande’s lead in recent days.
It said the socialist would take 28.5 per cent of the vote in the first round, while the president stood at 27 per cent.