Submitted by Fox First at Ten on September 28th
PARIS (AP) - French President Francois Hollande's budget plans to reduce the government's deficit by €30 billion ($39 billion), or about 1.5 percent of gross domestic product. Two-thirds of that will come from new taxes and one-third from spending cuts.
The government says most of the tax burden will fall on the richest people and the wealthiest companies, partially because they can afford to pay more and partially because it accuses the previous administration of going too easy on them.
Here are some of the taxes:
- Two new levels in the income tax: one at 45 percent for income earned above €150,000 and the now infamous 75 percent tax for income earned over €1 million. The latter will last only for two years. Previously, the highest tax bracket was at 41 percent for income earned above €70,000.
- Increases in taxes on investments - such as stock dividends and real estate - to bring them more in line with the taxes levied on salaries.
- An end to some tax deductions for companies, such as on interest payments for their loans.
- An increase in the wealth tax, a band of rates that applies to people with assets of more than €1.3 million.
- An increase in taxes on companies' profits if they are distributed to shareholders and the introduction of a tax break for the companies if the profits are reinvested.
The budget freezes next year's government spending at this year's level of around €370 billion. But, to do that, it has to cut €10 billion that would have automatically been added to the balance sheet through inflation and automatic raises. Here are some of the cuts:
- €2.2 billion from defense programs
- €1.2 billion from state investment in infrastructure and other projects, like building prisons
- €2.8 billion from administrative costs across all ministries
- €2 billion from subsidies and benefit programs
- €1.8 billion less given to state-funded agencies and local governments
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