Sometime between the end of April and beginning of May, France will head to the polls to select the next president. One Socialist candidate is hoping to garner votes by proposing a 75 percent millionaires tax.
France’s financial affairs are a tremendous issue in this year’s presidential election. The government faces increasing deficits and debt. The nation’s debt is 85.8 percent of its GDP, the deficit was 7.1 percent of the GDP in 2010 and public spending accounted for 56 percent a year ago – it fell due to higher taxes and unexpected economic growth.
French President Nicolas Sarkozy has promised to balance the books in the next four years. However, his closest competitor, Socialist presidential candidate Francois Hollande has guaranteed the same timeframe (2017).
Other than cutting spending, what else can the French government do to garner revenues? How about taxing the affluent individuals three quarters of their income? If you think that is farfetched, the Socialist candidate is proposing this idea, which has gained a lot of support in the country.
If elected, Hollande would add a 75 percent tax on anyone who earns €1 million ($1.33 million) annually. It has been dubbed as the “Fouquet’s Tax.” The incumbent president countered the proposal with an increase in consumer taxes and Francois Bayrou, the centrist Democratic Movement party candidate, dismissed the idea completely.
Meanwhile, economists are befuddled by the proposal. Nevertheless, this is both hurting and helping Sarkozy at the same time, according to one French pollster, who found that Sarkozy and Hollande are neck and neck.
“Nicolas Sarkozy has a double difficulty: On the one hand, he is perceived as a president who is close to the rich, which is not a good sign in France. And he is also seen as a president who oversaw inegalitarian policies,” said Jean-Daniel Levy in an interview with the Associated Press. “[It] allows Francois Hollande to take control again and to paint a negative portrait of Nicolas Sarkozy.”
The latest poll suggests that Hollande maintains an eight-point lead over Sarkozy with 54 percent of the vote.
Hollande has faced some minor backlash in his comments. First, Hollande stated that the tax would apply to households earning more than €1 million, but revised his campaign pledge by saying it would apply to individuals. Also, the Socialist candidate admitted that it would only bring it about €100 million and €300 million – France is fighting a €1.7 trillion ($2.3 trillion) national debt.
There is talk amongst the French business community that millionaires in the country have warned that they would head to Belgium if such a tax would be implemented.
French voters head to the polls between Apr. 23 and May 6. Five candidates are vying for the presidency:
Nicolas Sarkozy | Union for a Popular Movement
Francois Hollande | Socialist Party
Jean-Luc Melenchon | Left Front
Marine Le Pen | National Front
Francois Bayrou | Democratic Movement