The Constitutional Council (CC) overturned on Saturday the plan of the French socialist government for a 75% tax on income over €1 million ($1.3 million), regarded as representative of the French budget for 2013. The French left leaning government approved the tax already.
The CC, guarantors of constitutional law, said that this new level of taxation violates the principle of taxation equality of the population. It aims to tax the income of each individual, while income tax is collected at the household level, said the magistrates.
They also rebuked the calculation method of tax cap on wealth (ISF), in particular the income integration or capitalized benefits that the taxpayer has not made. The exceptional charge of 75% would have been applied for a period of two years on income of more than €1 million per year per taxpayer. Symbolic, rather than effective, the tax would have been applied to about 1,500 people who would have paid an average amount of €140,000 under this law.
The high court was notified by UMP (right), the main opposition party, which virulently attacks the “fiscal thrashing” practiced by the left political parties in power during the presidency of François Hollande. Constitutional Council’s decision comes in the context of the debate on “fiscal exile” of the actor Gérard Depardieu, who recently settled in Belgium.
However, the Constitutional Council validated a tax credit worth €20 billion on businesses, included in the amended budget for 2012, a representative measure of the “pact for competitiveness” proposed by the Socialist government led by Jean-Marc Ayrault and adopted by Parliament.
The tax credit adopted in first reading by National Assembly, but rejected by the Senate, will be reintroduced in a new reading in the National Assembly.
Businesses would receive first checks from the Treasury for this tax credit in 2014 for the 2013 year, but they may consider it from the beginning of 2013 within their budgets. The measure would be financed by a three-level increase in VAT, namely 5, 10 and 20% (€6.4 billion in 2014), financed from public expenditure savings of €10 billion and green tax measures.
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